Pakistan auto industry faces headwind as prices of cars increase significantly

Prices of vehicles have increased in Pakistan after the Sindh Excise and Taxation Department of the country increased taxes on them through Finance (Supplementary) Act, 2022, ARY News reported. The National Assembly of the country passed the controversial Bill, which is generally known as the "mini-budget".

The bill was passed despite fierce objections from the opposition benches, and after it got implemented, prices of vehicles in the country have increased significantly. Tax on cars that are over 1,000cc has been increased to ₹100,000 from the existing ₹50,000.

While tax on vehicles that range between 1001cc to 2000cc have also increased to ₹200,000 compared to the existing ₹100,000 tax. Those vehicle owners whose cars are 2001cc and above, will pay ₹400,000 in taxes, reported the news channel. This could be a pinch for the automotive industry of Pakistan, which is the backbone of the country. Cars in this category form a bulk of overall sales and are generally more prone to rise and fall in demand with the rise or cut in taxes.

Pakistan is currently under heavy debt and inflation in the country is also increasing rapidly. Earlier, Prime Minister Imran Khan also admitted that the people in the country are facing massive inflation as prices of commodities and fuel have surged in the nation, a media report said.

The Pakistani government has, in the past, shown its intent of giving priority to local manufacturing and making imported vehicles more expensive. But the most recent move to hike taxes almost across segments and categories could slam the brakes. “I anticipate a drop of 10-15pc in the sales of locally-assembled vehicles in case tax changes are made till the new budget announcement," Indus Motor Company CEO Ali Asghar Jamali was quoted as saying by Dawn earlier this month.

(with inputs from ANI)