Car prices in Pakistan began to see a rapid increase since December 2017 when Pak Rupee which for long hovered at around Rs 104 started to decline against the US Dollar. Subsequently prices of local assembled as well as imported vehicles sold in the country were revised quite frequently.
A nearly 40% increase in prices started to cast negative impact on car sales. For the first time after 6 years automobile sector recorded decline in sales which dropped 8% to 237,950 units in fiscal year 2019.
But things started to go from bad to worst ever since the beginning of this fiscal year. It all started with the ban on purchasing new cars by non-filers which constitutes nearly 60% of car buyers in the country. Later the government announced that non-filers of tax return can register only one vehicle against their CNIC. Then the government imposed Additional Customs Duty (ACD), Additional Sales Tax (AST), Federal Excise Duty (FED) ranging from 2.5 to 7.5% depending on engine displacement and the turnover tax which hampered the sales quite badly.
This was coupled with constantly increasing car prices even when the Rupee was stable & in fact recovered by 6% between August and December 2019. Today the Rupee values nearly the same against the US Dollar as it was in June 2019 (Rs 164), & is currently being traded at Rs 165.5. But if we compare car prices from a year ago, there is a substantial difference. Refer to the table below:
|Car||July 2019||June 2020||Price Difference|
|FAW X-PV Dual A/C||1,174,000||1,269,000||95,000|
|FAW X-PV Standard||1,114,000||1,209,000||95,000|
|Honda City 1.3 M/T||2,309,000||2,389,000||80,000|
|Honda City 1.3 P/T||2,489,000||2,574,000||85,000|
|Honda City 1.5 M/T||2,369,000||2,459,000||90,000|
|Honda City 1.5 P/T||2,539,000||2,629,000||90,000|
|Honda City 1.5 Aspire M/T||2,539,000||2,629,000||90,000|
|Honda City 1.5 Aspire P/T||2,699,000||2,789,000||90,000|
|Honda Civic 1.8 CVT||3,499,000||3,649,000||150,000|
|Honda Civic 1.8 CVT Oriel||3,749,000||3,899,000||150,000|
|Honda BR-V CVT||2,949,000||3,239,000||290,000|
|Honda BR-V CVT-S||3,099,000||3,399,000||300,000|
|Toyota Corolla 1.6 Altis||3,149,000||3,309,000||160,000|
|Toyota Corolla 1.8 Altis M/T||3,299,000||3,479,000||180,000|
|Toyota Corolla 1.8 Altis CVT||3,499,000||3,679,000||180,000|
|Toyota Corolla 1.8 Altis Grande M/T||3,499,000||3,679,000||180,000|
|Toyota Corolla 1.8 Altis Grande CVT||3,699,000||3,899,000||200,000|
|Toyota Fortuner 2.7 Petrol||7,999,000||8,399,000||400,000|
|Toyota Fortuner 2.8 Diesel||8,649,000||9,149,000||500,000|
|Toyota Hilux Revo 2.8 V||6,249,000||6,549,000||300,000|
|Toyota Hilux Revo 2.8 G A/T||5,899,000||6,199,000||300,000|
|Suzuki WagonR VXR||1,540,000||1,605,000||65,000|
|Suzuki WagonR VXL||1,625,000||1,695,000||70,000|
|Suzuki Cultus VXL||1,855,000||1,865,000||10,000|
|Suzuki Cultus VXL AGS||1,975,000||1,985,000||10,000|
|Suzuki Swift DLX M/T||1,905,000||1,995,000||90,000|
|Suzuki Swift DLX A/T||2,050,000||2,140,000||90,000|
Auto industry had forecasted to increase its sales to 0.3 million by 2021 and half a million units by 2022; however from the looks of it, the sector is far from achieving this goal. So far in the 11 months of this fiscal year, automakers in Pakistan have assembled only 89,284 cars compared to 196,415 units in the same period of previous year. Sales have witnessed 50% to up to 80% reduction in various vehicle segments.
Related: Auto Sector Demands Tax Reduction
The latest blow to the local auto industry was the COVID-19 pandemic for which the industry was never prepared. Due to lockdowns the assemblers had to shut down the plants towards the third week of March for almost two months which severely dented the production schedules, vehicle sales & deliveries. For the first time ever, zero sales were recorded in the month of April, whereas in May when the lockdowns were eased, a 75% year-on-year decline in sales was observed.
Local auto assemblers had sought high priority government attention in shape of a stimulus package to deal with the impact of the coronavirus pandemic, however the Pakistan Automobile Manufacturers Association (PAMA) has shown displeasure over the absence of such measures in the recently announced Financial Budget 2020-21 where the government has literally shown a cold shoulder to the auto industry. Automakers & parts manufacturers believe that the automobile industry would face further devastation with lack of government support and revenue generated from the sector would also take a hit.
Local auto industry has always enjoyed utmost government support ever since, however this will probably be the first time when government hasn’t looked interested in providing even the slightest of relief to the ailing sector. With sales already reduced by nearly 80% what will be the future of local assembled cars in Pakistan, only time will tell. However from the looks of it, the road ahead isn’t going to be easy at all.