Will local automakers decrease car prices?

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In the recent turn of events, after a petition submitted by a social media campaigner, the Supreme Court has sent out a directive to the Ministry of Finance and the Federal Board of Revenue to reduce taxes on cars to 25%, report Express Tribune. Previously, the tax on cars was 33%.

This should be considered good news by local automakers, but the main question here is that, will the automakers decrease the rates of their products’ lineup, keeping in view the relaxation which the Supreme Court has provided them. It is a question which needs to be addressed.

The local automakers have increased car prices multiple times, since the beginning of 2018. Not only carmakers but, also bike manufacturers increased the rates of their products. Simply put, automakers, up until now, have increased the rates of their vehicles by up to 5-8%.

According to the local auto manufacturers, the reasons behind the car price increase are the increasing dollar rate and the taxes on automobiles. However, for the last two weeks, the rupee has appreciated against the US dollar by 5 rupees. In the last month, the dollar reached record high and hit PKR 129 whereas, at the start of this month the dollar depreciated to PKR 117 and, as of now, the exchange rate is stable at PKR 124.

Read Also: The falling rupee and the Pakistani auto sector

Moreover, as per the Supreme Court’s order as reported by ET to lessen tax on cars, the two above mentioned issues of local carmakers have been addressed to some extent. But, the history says otherwise, it is unlikely that these automakers will decrease the prices ever.

Whenever, there is some fluctuation in the US dollar rates and taxes, all the manufacturers without thinking twice pass all the burden to customers by surging the prices of their vehicles, but when, the dollar falls, or there is some relaxation in the taxes, they don’t bother to decrease the rates.

See Also: Dollar fluctuations spark interest in economy cars

We tried to reach out to the local automakers and will update the story upon receiving their stance on the matter.

Till then, let us know what do you think about this SC’s directive, in the comments section below.

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