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Honda Cars on Friday announced a price reduction of up to Rs140,000 on two variants of its City model, following a similar move by Indus Motor Company, which also slashed prices of its Toyota Yaris cars. The adjusted rates will be effective from March 15th.
The price of the City MT1.2L has been lowered by Rs50,000 to Rs4.649 million, while the City CVT 1.2L sees a reduction of Rs140,000, bringing its new price to Rs4.689 million.
Earlier, Toyota had announced a price reduction for its Yaris sedan lineup, ranging from Rs73,000 to Rs133,000.
This coordinated adjustment by both companies is a response to the recent increase in the sales tax to 25% on automobiles priced above Rs4 million.
Muhammad Abrar Polani, a research analyst at Arif Habib Limited (AHL), noted that Honda’s decision aligns with Toyota’s strategy to mitigate the impact of the increased sales tax on cars with engine sizes above 1400cc and those priced at Rs4 million and above.
The government’s decision to raise the sales tax on vehicles with engine sizes of 1,400cc and above, as well as those priced above Rs4 million, from 18% to 25%, has significantly affected the auto industry.
Initially, the tax increase targeted cars with engine sizes of 1400cc and above, while SUVs, even those below 1400cc, were to remain at the 18% tax rate. However, SUV manufacturers producing vehicles below 1400cc were unable to avoid the tax hike and advocated for the inclusion of a Rs4 million price cap. This inclusion resulted in certain Toyota, Honda, and Suzuki models falling under the increased sales tax regime.
