Price increases have become a major source of concern for car consumers across Pakistan. Buyers of inexpensive cars, in particular, have suffered significantly.
The government is aware of the problem and is working to resolve it. The Ministry of Industries and Production (MoIP) suggested tax cuts in the car sector’s fiscal budget for 2022-23 at a recent parliament session.
According to media sources, the MoIP has proposed the following new car tax reductions:
- Federal Excise Duty is being reduced by 2.5 percent (FED)
- Additional Customs Duty is reduced by 2%. (ACD)
Car firms had already raised prices multiple times before the budget release, blaming depreciation of the local currency, rising raw material costs, and freight charges, according to the MoIP.
Last week, the Engineering Development Board (EDB) warned local automakers against price increases. The board requested their cost structures and justifications for the recent hikes, according to an official document.
It called a meeting on the subject for May 10, 2022, in which it asked the attendance of practically all local automobile businesses’ CEOs. Following EDB’s meeting with senior officials from the auto industry, reports of the MoIP’s plan to decrease taxes on the auto sector surfaced.
Due to value and supply chain concerns, automakers insist they have no choice but to raise the pricing of their vehicles.
They have also openly questioned the government’s efforts to impose price controls on automobiles, claiming that Pakistan is a free market and that automakers have the right to set their own rates.
Following EDB’s meeting with CEOs of several automakers in Pakistan, the polarization between government and automakers seemed to have abated.