Pakistan Automotive industry is the fast-growing industry and contributes the largest part in the economy but the year 2019 give a very tough time to the Automotive industry in the form of high taxes and high duties. A new government imposed new taxes on the automotive industry and imposed a ban on used vehicle import for commercial and this is a big shock for the used car dealers. On the other side, the local automotive industry also faces problems government-imposed FED on cars in the finance budget 2019-2020 and government FED on all vehicles with different categories.
Cars sales down in 2019:
The sales of cars down in 2019 as compared to the year 2018 and there are two reasons the devaluation of the currency and the increasing of tax on cars. In the finance budget 2019-2020 the government imposed Federal Excise Duty on all vehicles according to the engine displacement this is a reason local auto manufacturers increase the prices of its vehicle almost all local auto manufacturers increase the prices of vehicles and the new prices are not bearable for everyone on the other side the rupee value is down and the strength of dollar increase in the international market. In this situation, there is no possibility for local auto manufacturers to the sold vehicle with low price because its not profitable for them and the high prices are not affordable for consumers. The sale of cars fall and this is a big loss for the Pakistan economy.
Recently the two biggest auto manufacturer of Pakistan Honda Atlas and Toyota Indus Motors has published their production report see below what they said:
Honda Atlas Cars Production:
Recently Honda Atlas has announced that the company closed its production plants for ten days. The company blamed that the high taxes and devaluation of currency badly affect the sales and from the last two months. The prices of the vehicle increased from the last two month because of the unstable currency rate. The company said the sales of cars from the last ten-month of the new fiscal year continuously down and this is very disappointing for the company. As compared to the last year the sales of Honda Atlas down 40% and this is a big loss for the company. According to the company in this situation, it’s better to close our production for ten days if we continue working with this situation the sales down less then 30,000 units as compared to the last fiscal year 2018 when the company sold 48,000 units.
Toyota Cars Production:
Toyota produces its cars in the country with the name of Indus Motors Company IMC produce Toyota units in Pakistan and this is very tough for the company to maintain its sales. The continuously fall the value of currency effect the sales because when the dollar strength increase vehicle prices also increase and this will badly affect the sales because consumer stops purchasing of a vehicle in this situation. The drop-down sales of cars affect the revenue of the company and this is a very tough situation for the company.
Used Vehicle Import:
Every year more than 70,000 vehicle import in Pakistan. The demand for a used vehicle is very high in our country because of the quality of the imported vehicle. But the new government-imposed ban on import of used vehicle for commercial and imposed SRO No. 52 (I) and under this law there are only three options for the people to import used car:
- Personal Baggage
- Gift Scheme
- Transfer of Residence
This policy imposed from January 2019 and the import was closed from January and its badly affect the used cars dealers. The import of used car not only beneficial for the dealers but its also profitable for the economy in the form of customs duty. But from the last 7 month dealers face a very tough time and most of the dealers shut down their business and move because they have requested many times to the government to reopen import for commercial use but the government refused their request. The government ban imported vehicle just because to promote the local automobile industry but the high taxes and devaluation of currency effect local automotive industry too.
