LAHORE - The duty relaxation on hybrid cars will also break the monopoly of the local auto assemblers, besides easing the pressure on fast depreciating gas reserves so that they can be provided to industry and electricity generation sector. The decision will also have different other impacts on our auto industry. Following the duty relaxation, the local auto assemblers will have to expand their portfolios and decrease prices to remain competitive as the pressure from imported hybrid cars rise.

Industry sources said that the new government has not favored the importers only as per the new budget; local auto assemblers will now be able to import CKD (Complete Knockdown Kits) on 25% duty instead of 35%. CKD (complete-knockdown-kit) is basically all the car parts which are manufactured in one country, and then shipped to another to be assembled into the final product. Pakistani automakers are auto assemblers and they import CKDs’ of cars and assemble them here.

Hybrid vehicles operate on a combination of petrol engine and electric motors. Toyota Prius has a system where electric motor only comes into play when you’re going on low speeds, in bumper-to-bumper traffic for example, and as you speed up, the petrol engine comes into play.

Another system is that electric motors power the wheels and as the battery runs out of juice, the onboard petrol engine swings into action to generate electricity to power the batteries.

As per industry circles, apart from the importing sector, the most an automaker can capitalize on this policy is Honda as it is the only one that offers that best Hybrid cars on the market today; Honda Jazz Hybrid with a 1200cc engine and Honda CR-Z Hybrid with a 1500cc petrol engine.

The best, and the most boring and not so good looking option in the 1800cc area is the Toyota Prius which previously had a 1500cc engine but was revised to 1800cc in 2009-2010 but Yaris (Vitz) Hybrid is one better option from Toyota.

Industry experts were of the view that although the effect of this new policy remains to be seen on the part of local auto assemblers as Suzuki is almost empty handed on Hybrids while Honda Atlas has remained quiet on this matter even though the high price of Civic has cost them a lot of customers, yet they remain anonymous on this whole development.

Indus Motors was however working for a while on introducing Prius in Pakistan and they had announced they would introduce it later this year.

They said that government denied any attention to local auto industry’s calls to reduce import age of cars or not remove duty on hybrids which is certainly weakens their monopoly however, it is also believed that the new government should have introduced special schemes and incentives to attract more foreign automakers entry into Pakistani market who otherwise are unable to enter the market due to local automakers’ monopoly.