Auto assemblers suffered a drop of 15% in car sales in May 2018 on a month-on-month basis on the flipside of increase in vehicle prices and government’s restriction on non-filers of income tax returns that are barred from buying a new car.
As per the data released by the Pakistan Automotive Manufacturers Association (PAMA), total car sales including light commercial vehicles and 4×4 were recorded at 21,813 units, a 15% fall compared to the previous month.
One of the reasons of slowdown in car sales is attributed towards higher vehicle purchase costs as companies raised prices for the third time within 6 months, attributing it to the rupee’s free-fall against the US dollar.
Moreover, the government’s restriction on booking and registration of new cars by non-filers of tax returns also played its part after companies stopped vehicle booking by such customers.
While the government intends to improve the tax net by restricting non-filers from purchasing new cars, it will badly hurt the auto industry as according to analysts, nearly 60% vehicle buyers in Pakistan are non-filers, while only about 40% are filers.
It will also have a negative effect on the new entrants who have invested a huge amount of money to assemble vehicles in our country. And considering the fact when existing assemblers are set to lose 60% non-filers as their prime buyers, the impact on the new entrants in the diminishing automobile market will be even worse.