Indus Motor Company has raised concerns that some competitors are mis-declaring vehicles as range-extended electric vehicles to qualify for lower GST rates. Regulators, including the Federal Board of Revenue (FBR), are now reviewing the matter, management said. Management also expects a resolution soon, which would create a more level playing field for automakers. It made the comments at its 37th Annual General Meeting, held after the release of the FY2026 results.
A range-extended electric vehicle, or REEV, runs on an electric motor. However, an internal combustion engine acts as a generator to recharge its battery. The Customs Classification Committee placed REEVs under the same HS code as battery electric vehicles. It reasoned that only the electric motor turns the wheels.
The Pakistan Automotive Manufacturers Association had challenged that classification earlier. Moreover, it argued that REEVs are essentially series hybrids because they still rely on an onboard engine and fuel. The dispute centres on whether REEVs deserve the same tax treatment as battery electric vehicles. Therefore, the outcome of the review matters for automakers competing in the electrified segment.
Meanwhile, Indus Motor said Toyota offers models across all categories globally with the latest technology. Its local launch strategy for EVs and PHEVs will follow the government’s approval of the new auto policy.
The company’s gross margin fell to 10.3 percent in 4QFY2026, down from 13.3 percent a year earlier and 15.5 percent in 3QFY2026. Strategic pricing and higher dealer incentives to support marketing drove the decline. Additionally, it plans Rs. 4 billion to Rs. 5 billion in FY2027 capex to increase localization of parts and components.
Management also built up inventory to manage shipment delays from the ongoing geopolitical situation. This step aims to reduce the risk of production disruptions. Hilux sales declined in FY2026 because government purchases fell during the ongoing war. Finally, the company expects the regulatory review to address differences in tax treatment between competing products.
