In the last few months, rates of Pakistani vehicles are growing high. Increasing the inflation rate affect the automotive industry. Pakistan is a country where automakers import auto parts from other countries. They have to pay the customs duty according to the government policy. Last year the government has increased the customs duty by 30%. In 2019 the government has imposed FED tax on all cars. After that, the rates of cars were high in Pakistan.
Recently car makers demand authority for relief on input tax. There is no answer to this request from the tax authority. This is a single reason for decreasing rates of vehicles but it’s not yet confirmed. Today we are going to discuss some major factors that are happened to rise car rates in Pakistan.
Devaluation of Currency:
Devaluation of currency is the largest reason for the jack-up amount of cars in Pakistan. The dollar is considered as an international currency. At the international level traders follow the dollar rate. This is a big reason for rising cars cost. There are two ways of how the dollar rate affects car prices:
- On the import of car from other countries (custom duty according to engine power)
- On the import of auto parts (custom duty)
If the strength of the dollar increase then automakers have to pay the amount on the current dollar rate. After that, they have to pay the FED and other taxes to the tax department. All of these are increasing the cost of the product. Auto manufacturers hike the prices to meet up their expenses.
Economic Crisis:
When the economy is falling its effect on the level of production. The low production activities didn’t fulfill market demand. The government has imposed taxes on automakers to collect money. After that, there is no option for them to hike the prices.
Pakistan is considered as underdeveloped countries. Our economic crisis is the cause of low production. The economic crisis also affects purchasing power.
Taxes Imposed by the Government:
Car-makers said they have to pay a high amount of taxes to the government. In 2019 cars sale in Pakistan decline. It’s just because of the hike in car prices. Car-makers try to recover the loss from consumer and the result is the decline in the sale.
Automakers already pay a tax on the import of auto parts. Every year government has imposed new taxes. It affects the cost and auto manufacturers increased prices.
Conclusion:
The amounts of cars high in Pakistan because we have a lot of economic crises. The value of our currency is very low in front of international currency. We have to pay a high amount to the government in a different form. Custom duty and FED tax is the major cause. Automakers demand relief in tax to reduce the prices and increase its sale. The sale volume of cars is going low every day. Car-makers offer a discount on different types to increase sales. They also introduce new models to attract their consumers. They put their full effort to boost the sale and recover the previous loss.
