Hybrid vehicle a salvage to a new dimension – Alt Research
By: Syed Ali Ahmed,
+92 21 3432-6919
s.ali@alt-research.com
Alternate Research
INDUS Motors Company (INDU) launched their much awaited Toyota Prius equipped with a 1800cc engine and a hybrid motor. According to the management, this model has been customized for Pakistan road conditions. The retail price has been fixed at staggering PkR4.49mn, this is inclusive of 37.5% customs duty and 17% (GST) making the total government duties to 43% of the total price. The market for high end vehicles is dominated with Toyota brands like Camry, Hilux, Hiace, Avanza vehicles and SUVs-Land Cruiser and Prado. With the current CBU portfolio INDU had a 39% market share in this segment in FY13 leading with Hiace, Terios and Avanza vehicles. With the launch of Prius, INDU has added a new variant to its CBU portfolio.
Where it all started
In the budget of FY13-14 government announced that HEVs up to 1200cc will be exempt from duties and other taxes. From 1201cc to 1800cc 50% relief from duties and other taxes will be provided and from 1801cc to 2500cc, 25% relief is proposed. No relief will be available for vehicles beyond 2500cc. GOP emphasized on the eco-friendly technology owing to increasing burden from the import of oil to meet the demand of petrol. However, up till now there is no Hybrid vehicle with an engine capacity of 1200cc. Since then all auto manufacturers are rushing towards introducing their own hybrid cars to compete with the imported hybrid cars.
Toyota Prius – The first official Hybrid vehicle in Pakistan
In order to capture increasing demand of Hybrid vehicle, and to take advantage of relaxed government duties INDU has launched Prius. However, used Prius was already imported in large numbers in Pakistan with price ranging from PkR2.2-2.7mn having engine capacity of 1500-1800cc engine. Hence, the price of Prius launched by INDU is 60-70% more than what the same model of used imported Prius costs. INDU management believed it would easily sell 100-150 Toyota Prius in a year which seems to be quite difficult with the price attached.
Honda Atlas all set to launch CR-Z
Out of the Big Three Automakers of Pakistan, only two have taken part in the race of Hybrid cars; Indus Motors with Prius and Honda Atlas with the CR-Z Hybrid. INDU has already taken the lead by introducing Prius whereas Honda Atlas will launch CR-Z sports Hybrid for PkR2.5mn soon this month. The major price difference between the two vehicles is due to the reason that Prius comes equipped with a 1800cc engine for which the duty and taxes have only been slashed by 25% while CR-Z Hybrid Sports comes with a 1500cc engine, a category for which government has slashed 50% in duty and taxes.
Where is the Catch?
Toyota Prius (Plug in vehicle) and Honda CR-Z have been highly successful worldwide and are now awaiting response in Pakistan. The major issue with Hybrid technology lies with the battery that this technology runs on. There are battery re-fuelling stations and Plug in chargers in other countries, that is why people are turning their choices towards this eco-friendly technology. However, in Pakistan neither do we have a battery re-fuelling station nor plug-in-chargeable technology hence buying Toyota Prius is not a one-time cost. The battery of Toyota Prius is said to have a life of 0.5mn km or 5 years (whichever comes first) and the replacement cost of this battery according to the management is around PkR0.6mn.
We stay pessimistic over the sales of Toyota Prius owing to the huge price attached with it and maintenance cost coupled with the risk of drainage of the battery.
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