KARACHI: The government’s decision of reducing general sales tax (GST) on locally assembled cars up to 850cc to 12.5 per cent from 17pc in the budget 2021-22 followed by exemption of federal excise duty (FED) and value-added tax will augur well for small car buyers in terms of price relief.

Pak Suzuki Motor Company Ltd (PSMCL) will enjoy the concession most as it rolls out Bolan and Alto 660cc in higher volumes whose sales remained upbeat with 65pc and 25pc rise in 11MFY21 to 8,009 and 36,504 units from 4,853 and 29,260 units in the same period FY20.

Stakeholders remained a bit hesitant in giving a clear reaction over the budgetary measures announced for the auto sector.

Head of PR and Official Spokesperson of PSMCL Shafiq Ahmed Shaikh said “these are excellent incentives and benefit to the consumers for the auto sector. We are appreciating the government on this.”

GST on cars up to 850cc cut to 12.5pc

PAAPAM former chairman Mashood Ali Khan said tax and duty relief on cars up to 850cc would improve demand, boost capacity utilization and employment in the auto sector. He urged the government and the State Bank of Pakis­tan (SBP) to consider slashing interest rates to five per cent from seven per cent on auto financing of cars up to 850cc to provide additional advantage to the consumers.

PAMA chairman and CEO Indus Motor Company Ali Asghar Jamali said “let me first understand the budget. My team will brief me on Monday and after which I can give reaction.”

Analyst at Topline Securities Shankar Talreja estimated a price fall up to Rs125,000 in Bolan and Alto 660cc after exemption in FED and cut in GST by 4.5pc.

APMDA chairman H.M. Shahzad said the government should have announced incentives to the used car importers almost on a par with relief to locally assembled vehicles up to 850cc.

Overall car sales during 11MFY21 posted a 56.6pc jump to 139,613 units from 89,130 units in 11MFY20 due to low interest rates that lured buyers in larger numbers amid rising prices and late delivery of vehicles.

Published in Dawn, June 12th, 2021