Overview
Finance Minister Ishaq Dar announced an increase in tax for vehicles as we mentioned in our previous blog. As per the new announcement, a fixed percentage has been increased for locally assembled cars and imported as well. Vehicles with engine capacity over 2000cc to 3000cc and above consider in the new tax increase.
Car prices are already unstable in Pakistan and the new strike of tax brings them up. Buying a new car is not an affordable option in Pakistan. Car prices changed twice a week which made an effect on the purchase of vehicles and customer behavior. The budget for 2023-24 dips the auto sector into serious challenges. Automotive parts tax is also increased in the term of the same customs duty for all parts.
New Tax For Locally Assembled Cars
The budget summary 2023-24 announced a fixed percentage and it is for cars over 2001cc.
- Cars with an engine capacity of 2001cc to 2500cc tax increased by 6% on the value of the vehicle.
- An 8% tax increase on the value of the vehicles categorized with an engine capacity of 2501cc to 3000cc.
- Vehicles with over 3000cc engine capacity will face a tax increase of 10% on the value of the vehicle.
An increase in tax percentage will affect local car prices which are already not in the friendly-budget range. The automotive sector’s challenging time period becoming long and long. There is no relaxation in customs duty and taxes announced in the budget 2023-24 for automakers to make a way to bring out car prices down.
Expected Increase In Car Prices
Expected price hike for cars 2001cc to 2500cc after an increase of 6% tax on the value of the vehicle.
| List of Cars | Variant | Engine capacity cc | Ex. Factory Price | New Fixed Tax Imposed | New Fixed Tax |
| Kia Sorento | 2.4 AWD | 2359 | 11,300,000 | 678,000 | 6% |
| Kia Sorento | 2.4 FWD | 2359 | 10,400,000 | 624,000 | |
| Hyundai Sonata | 2.5 | 2497 | 11,280,000 | 676,800 |
Car prices like to increase in the below-mentioned way as an 8% tax has been increased on the value of the vehicle that comes with over 2500cc to 3000cc engine capacity.
| List of Cars | Variant | Engine capacity cc | Ex. Factory Price | New Fixed Tax Imposed | New Fixed Tax | |
| Toyota Hilux Revo | Revo V Automatic 2.8 | 2755 | 14,389,000 | 1,151,120 | ||
| Toyota Hilux | Revo GR-S | 2755 | 16,149,000 | 1,291,920 | ||
| Toyota Hilux Rocco | Rocco | 2755 | 15,179,000 | 1,214,320 | ||
| Toyota Fortuner | Legender | 2755 | 20,129,000 | 1,610,320 | ||
| Toyota Fortuner | GR-S | 2755 | 21,089,000 | 1,687,120 | ||
| Toyota Fortuner | V | 2694 | 18,099,000 | 1,447,920 | ||
| Toyota Fortuner | 2.8 Sigma 4 | 2755 | 19,079,000 | 1,526,320 | ||
| Isuzu D-Max | V-Cross Automatic 3.0 | 2999 | 11,800,000 | 944,000 | ||
Vehicles with engine capacity over 3000cc will face a tax increase of 10% on the value of a vehicle and it is expected to hike price as:
| List of Cars | Variant | Engine capacity cc | Ex. Factory Price | New Fixed Tax Imposed | New Fixed Tax |
| Kia Sorento | 3.5 | 3479 | 11,390,000 | 1,139,000 | 10% |
Conclusion
The above-mentioned price hike is not announced by the locally assembled cars manufacturer, but it is an expected price increase which is calculated as per the increase in a percentage. However, the final announcement will be officially announced by the carmaker. We will have to wait for their statement to see how its impacts their business and overall cost and sale figures.
