Indus Motor Company (INDU) has raised concerns over some competitors allegedly mis-declaring vehicles under the range-extended electric vehicle (REEV) category to benefit from lower GST rates.
The matter is now under review by regulators, including the Federal Board of Revenue (FBR), management noted.
The company’s management said it expects the issue to be resolved soon, which would provide a more level playing field for automakers. The comments came during Indus Motor’s 37th Annual General Meeting held after the company released its FY2026 results.
A Range Extended Electric Vehicle, or REEV, is powered by an electric motor, but it also has an internal combustion engine that works as a generator to recharge the battery.
The Customs Classification Committee classified REEVs under the same HS code as battery electric vehicles, because the wheels are driven solely by the electric motor.
Pakistan Automotive Manufacturers Association had also challenged the classification earlier, arguing that REEVs are essentially series hybrids rather than pure battery electric vehicles because they still rely on an onboard combustion engine and fuel.
On its EV and PHEV lineup, Indus Motor said Toyota has models across all vehicle categories globally using the latest technology, with its local launch strategy to be finalized after government approval, ratification, and announcement of the new auto policy.
Indus Motor’s gross margin fell to 10.3 percent in 4QFY2026 from 13.3 percent a year earlier and 15.5 percent in 3QFY2026 due to strategic pricing and higher dealer incentives to support marketing. The company plans Rs. 4 billion to Rs. 5 billion in FY2027 capex to increase localization of parts and components.
Management said it also increased inventory to manage shipment delays caused by the ongoing geopolitical situation and reduce production disruption risks. Hilux sales declined in FY2026 as government purchases fell amid the ongoing war, while the company expects the regulatory review of the REEV classification issue to address differences in tax treatment between competing products.
