Lately in Pakistan, business sector in general and automotive industry in particular is suffering through major setbacks. Tax being the burning issue of Pakistan now-a-days, has made various companies to raise product prices in order to meet their costs. Particularly in auto sector, various assemblers have marked an increase in prices owing to rupee devaluation and heavy duties and import bans on cars.
However, it seems like there is a long way ahead for auto sector to cover these obstacles of taxes and bans in order to excel for development.
In one of Automark’s recent articles ( https://www.automark.pk/suzuki-alto-price-likely-to-go-up-by-rs-1-lac-from-1st-august/ ), the issue of increase prices and a major news about Pak Suzuki to increase price of its new Alto and Vitara cars broke out through industry sources. While it did not get official but the news was confirmed. In continuation of this, on July 31, 2019, Pak Suzuki sent a notice to its authorized dealerships clearly mentioning the new increased retail prices. This confirms the fact that automobile companies are not having enough paybacks to cover their costs and due to this, the strategy of incrementing price is coming into effect. Below are the exact retail prices of Alto and Vitara car variants by Pak Suzuki:
|S.#||Model||Old Retail Price Exclusive of Advance Income Tax (PKR)||Price Revision||New Retail Price Exclusive of Advance Income Tax (PKR) w.e.f Aug 1, 2019|
|3||ALTO VXL/AGS||1,295, 000||138,000||1,433,000|
Note that while the above mentioned prices are inclusive of Ex-factory price and freight charges incurred on vehicle to reach dealership premises, they are exclusive of Advance income tax. In addition, the new retail prices will be implemented from August 1, 2019. The notice also states:
“The above prices are subject to change without notice and prices at the time of delivery shall apply. Any government tax applicable will be charged to the customer.”
Clearly, both the producers and consumers are getting worse off at this point. The opportunity cost of high taxes and duties have to be borne by customers. Starting from putting import bans on used cars, moving towards high duties and taxes and now these price hikes are restricting the auto sector of Pakistan to grow and giving hard times to car assemblers. In current scenario, there is a dire need of a passive and productive dialogue between government officials and stakeholders of auto sector so that a middle way can come out which benefits both the parties. If this does not happen now, the consequences of present situation will last long in future.
by Amara Aqsa