Small car prices to go down by Rs100,000: Pakistan minister

Industries and Production Minister Khusro Bakhtiar has said the prices of small cars are going to be reduced by Rs100,000.

The price of a 1,000cc car will be reduced by Rs142,000, Bakhtiar said at a press conference in Islamabad.

The government has eliminated the Federal Excise Duty and reduced sales tax on cars in Budget 2021-22, according to the minister.

The auto sector plays a 10% role in large-scale manufacturing, according to the minister. Last year, it manufactured 164,000 cars and aims to produce 300,000 next year.

Here are some takeaways from the press conference:

• The 660cc Alto will go down by Rs100,000
• Toyota Yaris will go down by Rs150,000
• If the delivery of the car is delayed by over 60 days, the carmaker will have to pay the customer KIBOR and 3% in penalty
• The person who books the car will register it in their name
• There will be online booking and you will be able to tell which stage your vehicle is at
• Car registration will be time-bound, with penalties from Rs50,000 to Rs200,000

The minister said the economy has been stabilised and now the country is heading towards growth.

Bakhtiar said the government intends to ensure international standards in the auto industry.

"Last year, 2,600,000 motorcycles were produced," he said. "Around 3 million motorcycles will be produced next year."

This would create 375,000 jobs in the auto sector, the minister said.

Related: Will Pakistan be getting cheap electric cars?

"It is a sector of Rs1200 billion and pays Rs350 billion in taxes," he said. "We have to go towards exports."

The minister said that whoever wants to buy a car will have to register it under their name.

"Whoever registers the car has to book it," Bakhtiar said, adding that the vehicles will be booked online.

He, however, said the registration won't be time-bound. "There will be Rs50,000 to Rs200,000 fine. We may make it 10% of the car's value."

This will squeeze the wiggle room for people trying to manipulate the market with "own" money, according to the minister.

He said the government will now focus on the quality of cars. "Our policy includes electric vehicles and hybrids."

Bakhtiar said they want the infrastructure to develop. This would increase production and create jobs, he added.

The additional customs duty was 7% and the carmakers made the customer pay it, according to the minister. They spoke to the big three — Toyota, Honda and Suzuki — and the carmakers will return the money.

“Now the ACD is 0% on 1,000cc and 2% for above 1,000cc,” he announced, adding that it has been approved by the cabinet.

“We believe in market mechanisms,” Bakhtiar said. “If in Pakistan fair prices and quality had to be ensured, we have to ensure reasonable protection between locally made and imported ready-made cars.”

But there is a challenge of under-invoicing, according to the minister.

“We have to see how much protection to offer if we want to improve localization,” he said. “The auto sector should not have 'mun manga' profit for bad quality.”

Bakhtiar said the government won’t allow imports after a certain limit.

“But it will have to see how much of an outlay in foreign exchange this would mean,” he said. “We are taking the auto policy to the cabinet in August. We may rationalise the import duties further.”

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