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January 22, 2012

Local auto industry paid Rs64bn in taxes last year

World

REUTERS
January 22, 2012

KARACHI: The local auto industry manufacturers and vendors had paid total revenue of Rs64 billion last year while the industry saved foreign exchange of $500 million during the same period, said a presentation of the Indus Motor Company (IMC) to visiting journalists on Saturday.
With total investments of Rs92 billion and 0.4 million job opportunities, the local auto manufacturing industry has contributed substantially in the growth of national economy.
Despite some challenges and regulatory issues, the local auto industry has been flourishing and it is one of the important contributors in the country’s gross domestic product (GDP) growth, it added.
However, the local auto industry is a victim of government’s anti-industry policies like the import of used cars which are not only hurting the industry but also depriving the government of huge revenues in terms of duties.
Besides, the local auto manufacturers are fighting with the misperception that they charge exorbitant prices for vehicles while the quality is also not good. Yet, most of the facts once known would easily make the public to change perception about the industry.
The prices of cars have been increased by only 14 percent in last 2 years whereas the price of steel has increased by 16.5 percent, aluminum by 50.5 percent and polypropylene by 127 percent, minimum wage has increased by 75 percent, electricity and gas increased by 51 percent and 43.6 percent respectively during the same period.
Besides this, the depreciation of Pakistani rupee also played its role in increasing pressure on the industry, like the US dollar increased by 20 percent, Japanese Yen by 66 percent and Thai Bhatt by 22 percent.
Moreover, the duties on completely knocked down units (CKD) in Pakistan are much higher than other regional countries which contribute to high car prices. CKD duty in the country ranges between 32 to 50 percent, while in Thailand it is 30 percent and in India it ranges between 10 to

30 percent.
One of the major players of local auto manufacturing industry, IMC, while nullifying the stereotype image of the industry, has contribution of 1.5 percent/year to the national economy growth and maintained its image of quality production with plausible prices.
In addition, it has increased its production capacity from 20 units per day in 1993 to 210 units per day in 2011.
The company also created huge job opportunities as its number of direct employees increased from 496 in 1993 to 2,180 in 2011.
While commenting on IMC’s performance, CEO IMC, Parvez Ghias said that the buyer’s trust on the quality of the company’s products can be gauged by the fact that the company’s unit sales increased from 11,000 in 1993 to 51,000 in 2011.
Similarly, its units’ production increased from 2,930 in 1993 to 50,759 in 2011.
He said that IMC has been contributing heavily to the localization.
It is pertinent to note here that a total of 582 Corolla parts and assemblies are produced locally, while the company’s vendor-base has increased from 21 in 1993 to 60 in 2011 and these vendors are employing over 0.2 million people.
He said that on the part of dealership, the company’s 3S dealership increased from 21 in 1993 to 24 in 2002 and 34 in 2011 and of the total 34 3S dealership, 8 are in north region, 16 in central region and 10 in south region.
The company’s 3S dealership will increase to 66 till 2016.

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