Pakistani auto industry expects 30% drop in sales
Pakistan’s auto industry is predicting a 30% drop in sales in 2022-23 after the cash-strapped government increased the tax on new vehicles and unveiled new policy measures, according to a media report.
The government has decided to increase withholding tax on filers and non-filers and imposed a 1% capital value tax (CVT) on vehicles over 1,300 CC, tightened the rules car financing to compress demand and raised interest rates, Pakistani newspaper Dawn reported. Monday.
Due to the weakening of the rupee and the rising cost of importing auto parts, automakers are expected to raise prices for their products, which will further slump auto sales.
Citing market sources, the report says assemblers are also scrambling to pass on the impact of the continued devaluation of the rupee against the dollar and high ocean freight rates in the form of vehicle price hikes after Eidul. Azha, many pointing out that the industry was going through a crisis.
Indus Motor Company (IMC) has already closed vehicle booking from May 18, followed by Lucky Motor Corporation Limited (LMCL) from May 20 on Picanto Automatic, and Sportage and Pak Suzuki Motor Company Limited (PSMCL) from of July 1.
These decisions were made by the assemblers due to the impending foreign exchange crisis and the decision of the State Bank of Pakistan (SBP) to deny the opening of Letters of Credit (LC) for the import of coins and accessories from May 20, 2022.
IMC CEO Ali Asghar Jamali predicted a fall of at least 30% in vehicle sales in FY23 due to rising fuel prices, SBP restrictions on opening LCs for car parts and new taxes imposed from 1 July.
On the chances of a price increase after Eid, Jamali said, “We have to raise the prices. No [other] According to auto industry insiders, the impact of rising various taxes, soaring interest rates, vehicle prices, high gasoline and diesel prices, LC restrictions and the reduction in consumer finance duration will be visible in September 2022 vehicle sales data, as assemblers are currently optimistic about the thousands of orders for cars, jeeps, SUVs and pickup trucks placed ago a few months and which would be delivered in the coming months.
About 26% of IMC’s total sales come from auto financing, while consumer financing’s share of Pak Suzuki’s total sales is 35%.
Fearing a 25-30% drop in sales in FY23, a Korean vehicle assembler said the company did not raise prices for Kia vehicles.
Some changes appeared after the finance law concerning the implementation of the CVT at 1% on vehicles over 1,300 CC from July 1st.
As a result, two Kia Stonic models now have 1 CVT for Rs 44,250 to Rs 47,250, three Sportage models between Rs 53,000 and Rs 64,990 and three Sorento models between Rs 68,360 and Rs 74,990.
According to Honda Atlas Cars Limited (HACL), the 1% CVT on the City 1.5 is between Rs 35,890 and Rs 38,990 while on two modes of the Honda BR-V, the CVT oscillates between Rs 42,490 and Rs 42,740. The 1% CVT on six Honda Civic models costs between Rs 55,490 and Rs 66,740.
Regarding the withholding tax (WHT) on filers and non-filers, the HACL official said that there is no change in the WHT on filers in the Honda product line.
However, Rs 75,000 is charged to non-filers when purchasing the Honda City 1,200 CC which was Rs 50,000 earlier.
PSMCL has informed its authorized dealers to charge Rs 10,000 for Alto (all variants), Bolan and Ravi of registrants which was Rs 7,500 while non-registrants will pay Rs 30,000 instead of Rs 15,000 on registrants. same models earlier.
Filers interested in buying a WagonR or Cultus (all variants) will have to pay Rs 20,000 instead of Rs 15,000, while Swift buyers will pay Rs 25,000.
(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)