Overview
Pakistan’s automotive industry’s instability is linked to disturbed economic affairs and magnificent inflation. Economic instability rises automotive concerns. Not only the automotive industry but every industry needs the economy’s support to grow. Our country’s recent ups and downs have dev the value of the rupee into a high crisis. The rising value of the international currency (Dollar) increased against the rupee value, making international payments difficult.
Automakers need the full support of the government in automotive parts import. The ongoing import restrictions and high customs duty on car parts rises concerns of car prices increase. Recently, the Finance Ministry announced the Fiscal year Budget 2023-24 and new documents raise the customs duty as well the documents make the customs duty rate equal for all types of parts. the documents explain the category of car parts removed and now it’s equal for all categories which is 35%.
Car Sales As Per PAMA Report
The challenging automotive industry makes trouble for car makers to increase sales and achieve their targets. Toyota, Honda, and Suzuki are the most popular Japanese car manufacturers in Pakistan. but the current situation is also not well for them. Pak Suzuki suffers huge loss and request the government o not to put more tax burden as its effect the car sale. Meanwhile, Honda recently issued a report which shows the company has sold only 56 units of its most popular models Honda City and Civic.
On the other side, Toyota record a sale slump of 12% in the last month and sold only 1,718 units. Pak Suzuki record the opposite reaction and sales increased by 101% in the last month and sold a total of 2,958 vehicles compared to previous month.
The recent report of the Pakistan Automotive Manufacturing Association (PAMA) car sales was slightly up in the Last month May 2023, compared to the previous month April. The report shows a 19% sale increase and a total of 5,290 vehicles were sold in May and only 4,463 vehicles were sold in April. Month-On-Month basis sales increased but YoY-basis automakers had huge losses. Coming to the year-on-year basis car sale shrink by 77%.
35% Customs Duty On Car Parts
The Budget 2023-24 announced a 35% customs duty rate (CD) on all car parts. The duty is now equal for all types of automotive parts including, proactive strips, luggage compartments, interior panels, padding, water, air hoses, channels, bumper, impact braces, spare tires, and parts thereof, bodywork, mounts, clamps, dampeners, other fitment components, engine and transmission assembly, suspension, brake components, wheels, tires, exhaust system, and electrical components.
The government documents consider all types of parts in the same value for tax. There are no specifications required to clear customs duty. It will make an impact on low-value car parts and might cause car prices to increase in the coming days. Meanwhile, automakers have not announced any change in car prices. We are expecting a new price hike because the change in customs duty will affect manufacturing costs.
Conclusion
The situation has made no sense to expect any price reduction in car prices. However, automakers announced some valuable promotions. Cherry offer “Ready Delivery” for Tiggo 8 Pro at the current price on limited stock. Meanwhile, Kia announced the same news but for all its cars Sportage, Picanto, Stonic, Carnival, and Sorento. The promotions were announced before the representation of Budget 2023-24 in the concerns of high customs duty on invoices. Meanwhile, whether these offers are still valid or not can be confirmed through Kia’s official dealerships.
