The auto industry of Pakistan facing a loss in this fiscal year. Recently Pakistan Bureau Of Statistics reported that the first two months of the current fiscal year the import of cars down by 85%.
The new government restricted the import of used vehicles in the country and banned the import of used vehicles for the local dealers.
Against this, the many local dealers shut down their business because of loss in business and move to another business.
According to the PBS report the total loss in completely built units (CBU) fall to $9.46 million in the fiscal year July-August 2019 and the same period last year 2018 it’s $61.88 million. Likewise, the import of completely knocked-down (CKD) plunged by 15.46% due to the increase of assembling cost.
During the first two months of the Fiscal Year, 2019-20 the total import was recorded $123 million as compared to the previous year the same import the record of import was $145.5 million.
The government imposed the 3 conditions on the import of used vehicle:
- Personal Baggage
- Gift Scheme
- Transfer of Residence
Under these policies the import of used cars not allowed to the local dealers. Local dealers request much time to the ministry to re-open the import of used cars for local dealers. As it is also beneficial for the economy in the form of customs duty. But the ministry has not accepted the request. The government restricts the import of used cars to promote the local auto industry. But recently the government imposed the Federal Excise Duty (FED) on all vehicles and after this the prices of vehicle increase by the companies.
The sale of the local auto industry also down due to the high prices of vehicles. The reason behind the increasing prices of local cars, the devaluation of the rupee value and the taxes. Due to the high rates of duty and taxes the cost of sale of the vehicles high.
What should the government do against this regard? Comment your Suggestion.
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