Prices of Cars Over 1500cc May INCREASE Soon

• Sulman Ali


• 24 Sep 2021

In order to control the trade deficit, the government is taking multiple steps focusing on the auto industry. Earlier, the State Bank of Pakistan (SBP) revised its Auto Finance Policy. Under these new regulations, the finance of imported vehicles, new and used, is banned. You can read about the new regulations here. And now it is expected that prices of cars above 1500cc will increase soon and the reason is below mentioned proposals. 

New Proposals

The Ministry of Industries and Production has sent these proposals to the government. If the proposals are accepted, the prices of cars and SUVs over 1500cc will go up. The reason is that the ministry has asked the government to increase Federal Excise Duty (FED) on these vehicles from current 5% to 10%. It is pertinent to mention that the government brought down FED to 5% under new Auto Policy (2021-2026).

However, the ministry said this FED on CKD manufacturing will be increased for a limited time because of the current financial crunch.

Meanwhile, the other proposals by the industry are:

• Regulatory Duty (RD) to be imposed on import of Electric Vehicles with battery over 50KWH. And the reason behind this proposal is the import of high-end CBU EVs due to a decrease in Customs Duty (CD). The CD was brought down to 10% from 25% under the new Auto Policy
• RD on Hybrid Vehicles (CBU) to be increased from 15% to 50% on cars with 1501cc to 1800cc engines. And the reason behind this proposal is that this hike will discourage the import of CBU vehicles and improve the current account deficit.
• RD on CBU import of gasoline vehicles to be increased from 15% to 50%. And the reason is the same as above.
• FED on 1501-1800cc CBU cars/SUVs to be increased to 10% from the current 5%.

We want to mention again that these are proposals; however, there are strong chances that these will be accepted and approved by the government. As mentioned in the proposals, the government is taking steps to control the current trade deficit. 

The good news is that these new proposals are not targeting cars up to 1000cc. So, some good news for the consumers.