The once-flourishing automotive industry in Pakistan has now hit a downfall. Car prices are now sky-high, and demand has sunken because of affordability!
What is essential here is to ask ourselves and the manufacturers why cars are becoming more and more impossible to own. Moreover, why are brands consecutively increasing prices every few months?
There are many possible reasons for soaring prices. We have identified three main reasons to share with you!
1. Rise in Taxes
One of the main reasons for the increase in prices of anything is mainly due to the rise in taxes. There are two kinds of taxes here, one is on imported auto parts, and the other on local parts.
During the first six months of the new fiscal year (which ends in June 2020), only 60,862 cars were produced (to date), and about 50,097 units were sold. Whereas during the same time last year, 113,494 were produced in Pakistan, and 104,038 were sold.
“Even in case of the cars being manufactured in pakistan, the raw material is being imported.
There is no local made metal sheet for the car and it is imported along with several body parts.
Even the steel mill products were not up to the mark and were not of acceptable quality. -Sohail bashir rana, chairman of pakistan automotive manufacturers accosciation (pamaa)
Since most parts have to be imported, with an increase in taxes, and other factors, assembling a car in Pakistan becomes super expensive.
“There are too many taxes in Pakistan,” says Sohail Bashir Rana. “There are import duties and taxes on raw materials, sure, but there have been so many additional taxes since last year. Then there is the disaster withholding tax in which some are adjustable and some non-adjustable. There is an evaluation on import which increases the cost,” he added.
2. Customs Duty on Imported Cars
Because of the highly-poor quality of local cars and next to none safety features, many individuals opt for importing cars. It is essential to add here that importing cars means you have more car options from the global markets to pick from.
After Pakistan Tehreek-e-Insaf came to power when Imran Khan became Prime Minister, the government increased customs duty to a whopping 30%! Moreover, duty on New Sport-Utility Vehicles (SUVs), New All-terrain vehicles, New Cars, and Jeeps 1801cc-3000cc, New Cars and Jeeps above 3000cc, New Cars and Jeeps Above 2000cc, New Cars and Jeeps Above 2500cc, and new other vehicles was increased from 50-80%.
3. Too Many Stakeholders
An imported car in Pakistan does not exit the port and end up at its designated dealership right away. The car is passed through various people before it reaches a dealership in the specified city or area. As the car is passed on, its price is increased, hence by the time a real buyer wants to purchase the unit; it becomes costly.
Know any more reasons? Share them with us in the comments below.
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