There is a certain reason why the Honda City price keeps hovering below a certain level, and that reason has been revealed by Honda.
Honda Atlas Cars Pakistan (HCAR) is making an effort to maintain the price of Honda City around Rs. 4.9 million. The aim is to leave the sedan below the Rs. 5 million mark at all costs.
Threshold is more important than you think. Vehicles costing more are available at a higher price tag. Rules linked to Budget 2026-27 mean that below the line, 5 million people would pay 25% sales tax, with the lower 18% rate applying below that line.
The explanation was during a corporate briefing session organized by HCAR. The pricing strategy was clearly explained to the participants.
It is important Honda gets it right. Currently 70% of Honda sales go to the Honda City, which is by far the company’s top-selling model.
Having that one car at that price is more than a footnote. The City is a important part of Honda business and if the City is in the higher tax bracket, it will have an impact on Honda business as a whole.
The auto sector margins have been challenged from a completely different angle. Profit margins remained tight throughout MY26, due to the depreciation of the Thai baht against the US dollar that increased the cost of imported parts.
Preserving the tax benefits of the sedan over the added cost of imports was paramount. That move is on the minds of margins, as it continues to keep the car more affordable to buyers.
In addition to city-specific prices, HCAR discussed the overall tax situation for imported vehicles in the new budget. Customs duties on imported completely built-up (CBU) vehicles now range from 30 to 50%, depending on engine size.
There are further import costs as well. The Additional Customs Duty (ACD) is applicable on the imported components with an applicable duty of 4% and Regulatory Duty of 8%.
Yet, despite all these pressures, HCAR asserted an optimistic tone for the upcoming year. The company predicts the auto industry in Pakistan will expand by approximately 25 per cent year on year and continues to be optimistic about its market share.
The briefing also addressed Honda EV strategy, and the company decided to give preference to hybrid vehicles over pure EV to Pakistan for the time being. If that is the case, then at least HCAR message to the buyers who are looking at a new City in the near future is clear the price strategy is not an accident and it would be advisable. The company focus is 5 million as long as this tax regime is in existence.
