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Thursday March 28, 2024

Car prices may further go down

For Alto 660cc, the new price is expected to stand at Rs1,093,542 after deduction in duties

By Mehtab Haider
August 05, 2021
Cars parked at a showroom. File photo
Cars parked at a showroom. File photo

ISLAMABAD: The government is considering different proposals to slash down Additional Customs Duty (ACD) and Regulatory Duty (RD) on different brands of cars and other vehicles under the upcoming Auto Development Policy (ADP) for 2021-26.

With reduction in taxes, it is expected that the prices of different brands of cars will be reduced ranging from Rs100,000 to Rs400,000 on different capacities of engines. The upcoming ADP 2021-26 is aimed at incentivising the new entrants and making the auto sector competitive to kick-start exporting motorcycles followed by cars and tractors from Pakistan.

The Ministry of Industries and Production, in consultation with Engineering Development Board (EDB), is contemplating different options to slash down taxes to bring down the prices of cars. However, the officials said that the number of different car brands would touch 55 in the coming few months and there will be sufficient competition to ensure provision of different schemes into the domestic auto market. This reduction in taxes will be a brief part of upcoming auto policy 2021-26 but it is expected to have a significant impact on expected reduction in prices.

These are just proposals so far and it remains to be seen how much approval does the the federal cabinet grant for reduction of taxes. The federal cabinet is expected to take up a new Auto Development Policy within the current month. The government is considering different proposals to slash down Additional Custom Duty (ACD) on Completely Built Unit (CBU), Completely Knocked Down (CKD) kits on imports and local manufacturing and Regulatory Duty (RD) on CBU as well as Hybrid CBU under the new Auto Development Policy 2021-26.

With the proposed reduction in ACD and RD, the prices of different car brands will be reduced ranging from Rs100,000 to Rs400,000 but it is dependent on the ability of the government to ensure passing of the benefits to the customers.

According to different proposals under consideration at the moment, the government plans that for the cars having engine capacity of 1000cc and below, the Additional Customs Duty on CBU will be brought down to zero. For 1001cc and above, the ACD on CBU will be brought down to 2 percent. The ACD on CKD import/local manufacturing, the vehicles with engine capacity of 1000cc and above will be brought down at zero while vehicles of 1001cc and above the ACD will be brought down to 2 percent. The Regulatory Duty (RD) is also expected to be reduced as for 1800cc and below, while the ACD on CBU will be brought down to zero. For 1801cc and above, the ACD on CBU will be fixed at 30 percent.

The Regulatory Duty for Hybrid CBUs will be considered to be reduced under the new Auto Development Policy as for 1800cc and below, the RD will be charged at zero while 1801cc and above, the RD will be charged at 15 percent.

For Alto 660cc, the current price stands at Rs11,98,000 and with reduction in Federal Excise Duty (FED) of Rs29,950, Sales Tax Rs53,910 and Additional Customs Duty of Rs20,965, the total reduction in price is expected to the tune of Rs104,458, so new price is expected to stand at Rs1,093,542.

Similarly, for Alto VXR 660, the current price stands at Rs1,633,000, the FED reduction will be Rs40,825, Sales Tax Rs73,485 and ACD Rs28,578, the total reduction is expected to be Rs142,388, so the new price is expected to stand at Rs 1,490,613. Also for Cultus AGS having capacity of 1000cc, the existing price is Rs2,130,000. The reduction in FED is expected to the tune of Rs53,250, Sales Tax Rs95,850 and ACD Rs37,275. The total price reduction is expected around Rs186,375 for Cultus AGS 1000cc and the new price is expected to be around Rs1,943,625.

For City 1.3 Automatic, the existing price stands at Rs2,639,000 and with FED reduction of Rs65,975, Sales Tax reduction at zero, ACD reduction of Rs46,183, so total reduction is expected to hover around Rs112,158. The new price of City 1.3 AT is expected to be around Rs2,526,843. For Yaris AT, the current price stands at Rs2,999,000 and with reduced FED and ACD, the total reduction is expected to be around Rs127,558 and new price will be around Rs2,871,543.

For Grande 1.8, the price stands at Rs3,999,000 and with expected reduction in FED and ACD, the total reduction is expected to be around Rs169,958 and new price will be standing at Rs3,829,043. For Sportage AWT 2, the current price is Rs5,399,000 and with reduced FED and ACD, the total reduction is expected to be around Rs229,458 and the new price will be around Rs 5,264,026.

For Toyota Fortuner, the new price is expected to drop to around Rs8,903,793 from the existing price of Rs9,299,000 with reduction to the tune of around Rs395,208 in FED and ACD.