As the automobile industry of Pakistan grows, it has come bearing bad news for the people of Pakistan in the shape of increased prices for automobiles in Pakistan. Car prices have gone exorbitantly high over the last couple of years, making them out of range of the mass population of Pakistan.
There are many things that have led to this increase in prices, such as increased taxes on the industry over the past couple of years, including withholding tax.
Similarly, another reason that is usually stated is the increased dollar value, as Pakistan’s automobile industry is focused on assembly rather than production, leading the industry to be import reliant, hence the impact on prices.
The prices between 2017 and 2021 are given below:
| Car | 2017 | 2021 | Percentage difference |
| Honda City 1.3 M/T | 1,549,000 | 2,449,000 | 58.10 |
| Honda City 1.3 P/T | 1,689,000 | 2,639,000 | 56.25 |
| Honda City 1.5 M/T | 1,599,000 | 2,529,000 | 58.16 |
| Honda City 1.5 P/T | 1,739,000 | 2,699,000 | 55.20 |
| Honda City 1.5 Aspire M/T | 1,729,000 | 2,699,000 | 56.10 |
| Honda City 1.5 Aspire P/T | 1,869,000 | 2,859,000 | 52.97 |
| Honda Civic 1.8 CVT | 2,349,000 | 3,729,000 | 58.75 |
| Honda Civic 1.8 CVT Oriel | 2,499,000 | 3,979,000 | 59.22 |
| Honda BR-V CVT M/T | 2,229,000 | 3,159,000 | 41.72 |
| Honda BR-V CVT-S | 2,329,000 | 3,479,000 | 49.38 |
| Toyota Corolla 1.6 Altis | 2,149,000 | 3,369,000 | 56.77 |
| Toyota Corolla 1.8 Altis M/T | 2,224,000 | 3,549,000 | 59.58 |
| Toyota Corolla 1.8 Altis CVT | 2,349,000 | 3,699,000 | 57.47 |
| Toyota Corolla 1.8 Altis Grande CVT | 2,549,000 | 3,979,000 | 56.10 |
| Toyota Fortuner 2.7 Petrol | 5,399,000 | 7,999,000 | 48.16 |
| Suzuki Cultus VXR | 1,250,000 | 1,780,000 | 42.40 |
| Suzuki Cultus VXL | 1,391,000 | 1,970,000 | 41.62 |
| Suzuki Cultus VXL AGS | 1,528,000 | 2,130,000 | 39.40 |
| Suzuki Swift DLX M/T | 1,327,000 | 2,030,000 | 52.98 |
| Suzuki Swift DLX A/T | 1,463,000 | 2,210,000 | 51.06 |
| Suzuki WagonR VXR | 1,054,000 | 1,640,000 | 55.60 |
| Suzuki WagonR VXL | 1,094,000 | 1,730,000 | 58.14 |
Source: Pakwheels
In an interview to a national media outlet, Mr. Sohail Bashir Rana, the chairman of the Pakistan Automotive Manufacturers Association (PAMA) said, “When we come to the local industry, the raw material and parts are expensive due to the dollar rising. Federal excise duty is imposed on the finished products, then that is followed by sales tax which makes the overall price high.”
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Mr. Rana told the media agency, that even in the case of the cars being manufactured in Pakistan, the raw material is being imported. There is no locally made metal sheet for the car and it is imported along with several body parts. Even the steel mill products were not up to the mark and were not of acceptable quality.
So, just to put this in perspective, in 2017 Pakistani Rupee was steady at Rs104 against the US dollar, and on 24th June 2021, the dollar costs Rs158.48 Pakistani Rupee.
Thus, according to the PAMA chairman, it is the taxes along with the increased import prices due to the government’s anti-import policies to balance the balance of payments, which leads to such a high price.
However, there is another burden on the consumer in the form of a premium paid to the dealers for buying cars right away, and dealers earn money through it, however, it causes the total cost of the car to rise in the market.
This ‘on’ is quite infamous and has been rampantly critiqued by the government and other actors in the market for being unfair to the consumers who can’t pay, and the government has been working towards deterring such practices in the market.
Similarly, the upcoming Auto Policy 2021-26 is reportedly focusing on bringing production to Pakistan and incentivizing Green Investment in Pakistan. Along with this, the government in its recent budget has made cars smaller than 850cc cheaper by slashing FED on locally assembled cars.
The sales tax on this category has also been reduced by 4.5 per cent, down to 12.5 per cent, making these cars hopefully more accessible to the majority.
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On the other hand, new entrants in the market will hopefully make the auto market more competitive driving the automobile prices down and easing the burden on the buyers.