Thursday September 28, 2023

Toyota car prices surge up to Rs2 million on sales tax hike

March 12, 2023

KARACHI: Car makers passed on the impact of a shocking sales tax hike by the government to buyers, with Indus Motor Company (IMC) announcing to increase Toyota vehicles prices up to 11 percent and KIA’s Lucky Motor Company (LMC) by 6 percent.

The auto industry face pressure of a recent hike in the sales tax from 18 percent to 25 percent on “luxury items”, one of multiple prior-actions the government has taken to unlock a deal with the International Monetary Fund.

With the increase in prices, the minimum price range of Toyota and KIA is now Rs4.5 million (Yaris 1.3 MT) and Rs5.2 million (Stonic EX) respectively, according to letters sent by the two companies to their dealers.

“We are compelled to pass on some impact to the market,” IMC stated in its letter, adding that the government had enhanced the rate of the sales tax to 25 percent on all CKD (completely knock-down) vehicles with engine capacity of 1,400cc and above (with exception of IMV-I single cabin), under Sales Tax Act 1990, through a statutory regulatory order (SRO. 297(1)/2023) dated March 8, 2023. Toyota’s Yaris 1.3 MT LO will now be sold at Rs4.5 million, while the new price of Yaris’s highest variant 1.5 CVT is over Rs5.7 million, with an increase of Rs183,000 and Rs556,000 respectively.

The minimum range of Corolla, its 1.6 MT, to be sold at over Rs6.1 million, while Corolla 1.8 CVT SR Black would cost more than Rs7.8 million, with a rise of Rs593,000 and Rs760,000 respectively. The most expensive Toyota vehicle would be Fortuner Diesel Legender at a price of over Rs20 million, with an increase of Rs2 million.

An economic downturn in Pakistan and a massive devaluation of the rupee has forced car makers in the country to jack up their vehicles’ prices multiple times in recent months. Imports curbs by the government to save its fast depleting foreign exchange reserves have played a catalyst role in production shutdowns and price hikes in not just auto, but many other industries in the country.

“As you are aware, economic uncertainties and the extreme volatile situation of rupee against the dollar has adversely impacted the cost of manufacturing for IMC. This situation has made it extremely difficult for IMC to hold the current indicative retail selling prices,” the company said in its letter. Following the increase, the new price of KIA’s Stonic EX and EX+ is Rs5.2 million and Rs5.73 million, respectively. The revised price of Sportage Alpha, FWD and AWD are Rs7.05 million, Rs7.79 million and Rs8.39 million, respectively.

The price of Sorento 2.4L FWD, 2.4L AWD and 3.5L FWD are Rs9.54 million, Rs10.39 million and Rs10.39 million respectively. Other car manufactures may also increase their unit prices in the coming days.

Car sales in the country have been on a continuous decline on a subdued demand amid the economic instability, and production shutdowns pushed by shortages of raw materials.