Automakers Happy as Government Allows Non-Filers to Buy New Cars

Local automakers including new & existing players have breathed a sigh of relief as the government in its latest financial amendments, have allowed non-filers of tax returns to buy new cars.

Related: Non-Filers Allowed to Purchase Cars up to 1300cc

The ban on non-filers had badly hit car sales in Pakistan during the first 7 months of the current fiscal year 2018-19 and the removal is expected to help regain the sales growth. Pak Suzuki Motor Company spokesman Shafiq Ahmad Shaikh while talking to The Express Tribune said:

“The government’s decision will help the company recover the lost 35% sales in the next three to four months. We really appreciate it as this is an encouraging step; the lifting of the ban on non-filers will definitely increase sales, growth and job opportunities in the auto industry.”

The restrictions on non-filers from purchasing new cars was first imposed during the tenure of PML-N government from 1st July, 2018 through the budget for fiscal year 2018-19. Later in January 2019, the PTI government (which came to power in August 2018) eased the condition, permitting non-filers of tax returns to buy new cars up to 1300cc engine capacity in the second mini-budget.

Related: FBR Raids United Motors Office in Lahore

Non-filers constituted about 60% of car buyers in Pakistan, while approximately 25% of car sales were estimated to be in the 1300cc or above category. The new development would particularly be positive for Honda Atlas followed by Indus Motors and Pak Suzuki. Honda Atlas sells all of its vehicles above 1300cc engine capacity while Indus Motors and Pak Suzuki sell approximately 50% and 3% respectively in the 1300cc and above engine categories.

FED comes into play

In addition to allow non-filers to buy new cars, the government has imposed a 10% Federal Excise Duty (FED) on 1700cc cars & above, the condition which was previously applicable to cars above 1800cc engine capacity. With this amendment, prices of the Honda Civic and Toyota Corolla Altis variants above 1700cc engine capacity are likely to witness an increase of up to Rs 280,000 or more.

Related: 2nd Mini Budget- 1800cc Car Prices to Increase

The government has also increased the FED on imported luxury cars above 1800cc from the existing 20% (imposed in January) to 25% in the recent supplementary budget. The duty on imported vehicles exceeding 3000cc engine capacity has also been raised to 30%.

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