Suzuki Alto, Pakistan’s most popular small car, recorded a dramatic sales decline last month, following sweeping changes in government taxes and levies.
According to the Pakistan Automotive Manufacturers Association (PAMA), Alto sales plunged by 75 percent, dropping from 9,497 units in June to only 2,327 units in July.
What Triggered the Decline?
The sharp fall came after the government raised the General Sales Tax (GST) on small cars up to 850cc from 12.5 percent to 18 percent. At the same time, a new NEV Levy was introduced, charging 1 percent on cars up to 1300cc, 2 percent on cars between 1301cc and 1800cc, and 3 percent on vehicles above 1800cc. The Alto, falling within the 1300cc bracket, was hit with the 1 percent levy in addition to the GST increase.
Price Hike and Affordability Issues
In response, Pakistan Suzuki Motors Company (PSMC) raised Alto’s price to Rs. 3,326,450, further reducing affordability for budget-conscious buyers. Dealers reported that the higher cost discouraged many first-time customers who form a major portion of Alto’s market.
Early Invoicing Strategy Backfires
Company officials acknowledged that an early invoicing strategy also played a role. To shield buyers from the upcoming tax hikes, PSMC invoiced July and August bookings in June. While this move boosted June sales, it left fewer transactions for the following months, amplifying the July slump.
The Bigger Picture
The result was a “perfect storm” for the Alto: higher taxes, a price hike, and demand pulled forward into June. Industry analysts warn that unless market conditions improve, Pakistan’s entry-level car segment may continue to face pressure, leaving consumers with fewer affordable options.
