Karachi – Indus Motor Company Limited (INDU), Pakistan’s leading Toyota assembler, expressed optimism during its recent 1HFY26 analyst briefing that the government will rationalize the sales tax structure in the forthcoming Auto Industry Policy 2026-31, effective post-June 2026.
Management specifically anticipates that the current 25% sales tax slab applicable to certain vehicle categories will be lowered to around 18%, aiming to neutralize tax disparities across the sector, enhance consumer affordability, and support sustainable growth amid IMF-aligned reforms.
This expectation comes against the backdrop of INDU’s robust half-year results, with revenue up 40% YoY to PKR 119.2 billion, driven by a 63% surge in sales volumes to 20,754 units.
Gross margins improved to 15.2% from 13.8% YoY, benefiting from stable exchange rates and higher throughput.
The company reiterated calls for a market-driven policy, including relaxation of auto financing restrictions (up to PKR 3 million), duty relief on exports, and controlled used-car imports to ensure fair competition.
Management also flagged potential supply disruptions from Middle East tensions and sought clarity on the 25% electric/hybrid vehicle sales mandate.
Analysts view this tax rationalization as a positive catalyst for the auto sector, potentially offsetting pressures from policy normalization and supporting volume recovery.
INDU remains a favored pick, with brokerage houses highlighting its strong fundamentals and market leadership.