Overview
Dear car buyers! Get ready for another prices shock because car prices going to touch the sky this time if the report of 25% GST on 850cc and above cars will be true for CKD and CBU units. Car makers previously received an attack of increase in 1% General Sales Tax (GST) on cars. After the increase of GST from 17% to 18%, car prices jumped twice times in a week.
The devaluation of the rupee value is a big cause of the increase in car prices. Automakers are compelled to hike the prices of cars. Because the cost of production is not easy with upset PKR situation. On the other side delay in LCs approval by the State Bank of Pakistan (SBP) also disturb the production process and causes of shut-down production plants.
Long story short! burden of taxes and devaluation rupee value forced automakers to revised prices according to the cost.
Depreciation of Rupee Value Against Dollar
Uncertainty about the dollar affects the overall condition of the economic and it’s a thing that matter a lot for stable economic condition. Car makers consume several shut-down of a production plant in a month due to a lack of recourses. The deliveries of vehicles were delayed due to the disturbance production process.
All these situations show not only car buyers suffer but also the makers face a hard time. if we find the reason behind all this it is due to inflation and a major one is a depressed economic condition. Manufacturing of vehicles can only be smooth with the government’s favor and this time the rising in taxes shows no favors from the officials.
Blur View of 25% GST
The media report that came to us is not clear right now. In the report mini vans and all imported cars Completely Built Unit (CBU) mentioned along with above 850cc and sport utility vehicles (SUVs) mentioned under the new 25% GST. But it’s not clear whether the 25% tax is only for CBU units or CKD will also include.
We assume that 25% GST will be only for CBU units because officials consider luxury items. The current USD value against PKR mkaes the imported car out of buying range. however, we can show a clear view once the FBR provides the official notice about the 25% tax implementation.
Conclusion
Luxury cars fall beyond expected prices. Several imported cars are stuck at the port. Meanwhile, local cars are also out of the customers’ range due to the increase in prices. After the 1% increase in GST, car makers revised car prices two to three times a week. Moreover, there is no price lock on the current car prices. After all this, the development of new vehicles disturbs badly and the automotive industry is totally in deficit.
