Automakers are likely to raise car prices in Pakistan to mitigate the impact of rising commodity costs and currency depreciation. According to industry officials, the cost of manufacturing inputs is rising significantly, owing primarily to the constant weakening of the rupee. The rupee fell to a new record low against the dollar on Wednesday, trading at 173.45 in the interbank market, continuing a slide that has seen it lose more than 13.5 percent since May.
The government reduces sales tax on cars under 1,000 cc earlier this year, as well as the additional customs duty and federal excise duty. The measures result in price reductions of up to Rs 400,000 in some models. The impact on the majority of cars remained between Rs 60,000 and Rs 200,000. The policy’s goal is to make cars more affordable to the general public. While it also aims to assist the auto industry in increasing its numbers to improve economies of scale.
According to media reports, the companies are only delaying car prices increases due to the government’s request. Despite the ongoing supply-chain crisis around the world. While speaking with the media, an industry source reveals that prices may rise by 5% beginning November 1, 2021.
The Ministry of Industry and Production threaten the automakers with fixing their car prices. Moreover, it demands that they share their costing structure with the government. However, the car companies began flexing their muscles within a few months of duty and tax reductions, irritating the government.
Despite the duty and tax reliefs provided to automakers as a result of the introduction of the 2021-22 budget, the companies are currently struggling to maintain vehicle prices due to rising production costs, which is gradually pushing the auto industry towards an impending wave of price hikes. In a piece of related news, Haval Jolion price in Pakistan increased by huge margin last month.
