Why Honda is seeking relaxation in the 1300cc limit for non-filers?

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In a recent move by the government, the restriction on the purchase of locally assembled new vehicles up to 1300cc for non-filers has been lifted that has left Honda Atlas Cars Pakistan in complete disarray.

The only main beneficiaries on the back of this move have been Suzuki and Toyota who manufacture cars that fall in the engine capacity of 1300cc. Honda is the only player in the automobile market of Pakistan that manufactures cars over 1300cc that makes it a tricky situation for them to handle following the recent lift of a ban on non-filers. If we look at the assembling line-up of Honda, it produces a couple of variants of City in terms of engine capacity. One of them being 1339cc and the other one is a 1500cc along with BR-V with the same engine capacity. Moving up the product line, Honda produces Civic with the engine capacity of 1800cc and a turbo variant of 1500cc. None of them, as the figures suggest fall in the category of under or equivalent to 1300cc. Therefore, Honda is seeking a marginal relaxation in the engine capacity to 1339cc instead of 1300cc as defined in the mini-budget presented on 23rd January 2019.

On the other hand, this news has brought more than just excitement to Pak Suzuki because their sales are pre-dominated in the market by cars under 1300cc bracket. The company saw a decline in the production and sales figures ever since the ban was imposed by the previous government last year. Now, as the restriction has been lifted, Suzuki finds as many as 5 of its vehicles including Mehran, Ravi pickup, Bolan, Wagon R, and Cultus under the 1300cc bracket. All of these mentioned models of Pak Suzuki will be available for purchase to non-filers under the new policy. The only vehicle that falls outside the allowed bracket is Swift whose engine capacity is 1328cc. But, Suzuki is not too worried because the production and sales volume of Swift was already low and won’t impact much on the overall sales of the company. With the launch of 660cc powered Alto in the local market under such circumstances of high demand would certainly make things more fluent for Pak Suzuki.

The third big player in the market, Toyota would not mind the new policy because two of their variants of Corolla, Xli and Gli both are equipped with a 1298cc engine. Toyota has always relied on these two variants largely for their overall sales and this move would certainly boost up their recent drop in sales. The other two variants named as Altis and Grande are 1598cc and 1798cc respectively. Other beneficiaries of this change in policy include United that has recently started the production of 800cc Bravo and Al-Haj FAW that produces its V2 car equipped with a 1298cc engine.

Read More: Additional tax non-filers have to pay to purchase a car up to 1300cc

It is worthy to mention here that the sales of all the locally assembled cars had dropped since the ban was imposed on the purchase of new cars on non-filers. But, in this recent announcement by the Finance Minister Asad Umar, all the local assemblers excluding Honda feel that their sales will regain the lost number in the previous months. Honda Pakistan, however, is looking for this marginal relaxation so that at least one of the variant of their Honda City becomes available to the non-filers for purchase.

It doesn’t seem like the government will extend the engine capacity limit in their new policy but we will have to wait and see. What do you think? Should the government extend the engine capacity to 1339cc to benefit Honda Pakistan? Let us know in the comments space below.

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