News Analysis |
To conform to the global shift towards environment-friendly electric/clean energy cars, the Government of Pakistan has introduced tax cuts and facilitation to the import of Hybrid vehicles and their parts in the controversial 2018-19 out-of-turn budget presented by the PML-N government.
These tax cuts have come at a crucial turn; several new international auto manufacturers are pouring in and setting their ground in Pakistan, all set to break the Big three monopoly and provide Pakistani consumers with a new world of auto endeavors. These companies are stepping in owing to the commendable auto policy 2016 by the Government of Pakistan.
To encourage the consumption of electric cars and to make the process easier, the newly appointed Finance Minister announced facilitation for charging stations “To promote environment-friendly electric vehicles, an enabling fiscal environment for related infrastructure is necessitated. It is, therefore, proposed that 16% customs duty on charging stations for electric vehicles may be withdrawn,” announced Finance Minister Miftah Ismail during the budget speech for fiscal year 2018-19.
Kia, Hyundai and SangYong Motor Company of South Korea, Germany’s Volkswagen, France’s Renault and Japan’s Nissan have announced plans and formed partnerships to enter Pakistan’s auto market, most probably in the running year.
“Customs duty on the import of electric cars is proposed to be reduced from 50% to 25%, in addition to exemption from 15% regulatory duty. Import of CKD (completely knocked down) kits for the assembly of electric cars in the country is proposed at 10%,” he said.
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In a summary, the incentives given out to hybrid auto market are:
- 16% customs duty tax on electric cars charging station waived off.
- Customs duty on the import of electric cars reduced to 25% with 50% reduction.
- 15% reduction in regulatory duty on hybrid cars.
- 10% less duty on assembling kit of electric cars.
These measures are in addition to the incentives already announced in the Auto Development Policy for 2016-21 that has been widely praised. The new entrants range from French automaker Renault to Korean carmakers such as KIA and Hyundai as well as Chinese firms, GVS earlier reported.
The French company Renault is considered to be among the more prominent of the new entrants. It is reported that Renault has entered into a definitive agreement with Al-Futtaim to gain access to the Pakistani market. According to the deal, Renault will bring its latest products and technology while Al-Futtaim will establish a new manufacturing and assembly plant and distribute the cars. It is expected that the Renault SUV Duster will be the first vehicle to be co-launched by Renault and Al-Futtaim.
These tax cuts have come at a crucial turn; several new international auto manufacturers are pouring in and setting their ground in Pakistan, all set to break the Big three monopoly and provide Pakistani consumers with a new world of auto endeavors.
The French are being followed by South Korean Companies namely Kia, and Hyundai. Both Korean companies are entering into partnerships with two local companies to launch new cars. Kia Lucky Motors will be used for introducing KIA models such as the Kia Picanto 2018 (Hatchback), Kia Rio 2018 (Hatchback), Kia Sportage 2018 (SUV) and Kia Carnival 2018 (MPV).
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Kia, Hyundai and SangYong Motor Company of South Korea, Germany’s Volkswagen, France’s Renault and Japan’s Nissan have announced plans and formed partnerships to enter Pakistan’s auto market, most probably in the running year.
Local importers like United Motors and Sazgar, the manufacturers of two-wheel and three-wheel vehicles, have also made plans to enter the country’s lucrative four-wheel industry, with United having hyped up the market by the ‘accidental’ unveiling of its new hatchback United Bravo.