Under the Auto Policy 2016-2021, Kia Lucky Motors was one of the many companies that entered the automotive sector of Pakistan. The company acquired the Greenfield status back in June 2017 which entitles it for tax breaks and other incentives to facilitate its initial operations. The total investment undertaken by the Kia Lucky Motors will amount to $190 million.
Kia Lucky Motors is expected to start its local production from August; however, it is considering the 10% Federal Excise Duty (FED) imposed recently to be a major hurdle in achieving satisfactory sales figures. The 10% FED was imposed on cars of 1700cc and above and included vehicles like Honda Civic, Toyota Altis Grande and Toyota Fortuner. Representatives of Kia Lucky Motors have also met with Abdul Razzak Dawood, the adviser to Prime Minister on commerce, industries, and textiles, to discuss probable issues and production plans.
According to the company, the booking of locally produced Sportage will commence from June and the booking for locally produced Picanto will commence in August. The delivery of Sportage is expected from August while Picanto is expected to be delivered from October. Kia Lucky Motors will start the production of Sportage and Picanto in August to meet the delivery schedules.
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Kia Sportage will be available with a 2000cc petrol engine; therefore, it is expected to get adversely affected by the 10% FED. Kia Picanto will come equipped with a 1200cc petrol engine and its sales figures will not get affected by the imposition of FED. Both Kia Lucky and Hyundai Nishat have filed requests with the federal government to withdraw 10% FED on locally manufactured cars. Engineering Development Board has also jumped in to support these new entrants as it is necessary for their survival in the country.
Kia Lucky Motors has also raised another issue under the Auto Policy 2016-2021 where an existing OEM (Original Equipment Manufacturer) has sought Greenfield status for its new investment. It argues that the Greenfield and Brownfield concessions are reserved for new entrants and not to be extended to the existing players. It also asserts that the decision to enter Pakistan was based on this provision of Auto Policy 2016-2021.
Tell us about your opinion in the comments section below on the new entrants in the automotive sector and how the 10% FED regulation can jeopardize their operations in Pakistan.
Wasn’t it 1000cc Picanto ? Now they are saying it will be 1.2 litter engine ?
Support the stance regarding FED imposition reversal.
Further, doubly support the stance regarding Greenfield status for Pak Suzuki which is an entrenched monopoly. Giving them this status is a gross violation of the letter and spirit of ADP 2016.