Will Locally Assembled MG HS Be Expensive Than Imported One?

Morris Garage (MG) launched its compact SUV MG HS in Pakistan in 2020. The car surely got the attention of local consumers as it has reasonable price, great shape and features. Since it launch, it has created Dhoom in Pakistan for both positive and negative aspects.  The first issue was whether car is British or Chinese. Although, it was revealed that it is British car owned by SAIC, a Chinese company, still people loved it and booked in large numbers. The company celebrated thousands of bookings across the country. The first consignment of MG HS CBU units arrived in Pakistan, and delivered to the customers.

Then the second issue erupted, when Customs held the second consignment of HS at Karachi port under the charges of under invoicing. The authority believes that the car’s per unit declared value is more than $11,632. This led to the late deliveries and protests by the buyers. In response, MG Pakistan protested and moved the court and requested it for release of its shipment. The court ordered to release of these MG vehicles under Section 81.

The Section 81 is about Dispute over the Valuation of a Product between two parties, which, in this case, were Pakistan Customs and MG Motors Pakistan. However, the court directed MG to submit a Pay Order as a guarantee. If Customs wins the case, it would cash the Pay Order; otherwise, MG would get those Pay Order back. 

When the third lot reached Pakistan, Customs said that now the car will be cleared on $13,314 per unit. And this led to price increase.

Price Increase of MG HS:

As mentioned earlier, the assessed value of MG HS was increased to $13,314 per unit. Hence, the company hiked the prices by Rs300,000. After the hike, the price of MG HS reached to Rs5,749,000, as compared to its old price of Rs5,449,000.

Meanwhile, Javed Afridi keeps on enticing with new teasers every other day. Recently, he shared pictures of local assembly of the MG HS, meaning the start of local assembly of MG HS. Like others, I was hoping that locally assembled HS will be cheaper as compared to CBU. For example, Proton X70 has different prices for CKD and CBU units.

But to our surprise, it may not the case as import data is showing something else.

The Twist:

As per my research, the company has imported 36 CKD kits of MG HS in two consignments meaning 18 kits per consignment. The data shows that the total declared value of 18 kits is $299,464, meaning the  value of single kit is $16,329. Interesting, isn’t it? This means, the imported car from China is cheaper than CKD, which is going to be assembled in Pakistan. Does it mean that there is negative production cost in China? I don’t have the answer of the question.

Source: https://weboc.gov.pk/

Let me explain it further, the price of a complete CBU unit is $13,314, while the price of a CKD kit is $16,329. How is it possible? Hence, I have three questions in mind:

• Will MG Pakistan launch CKD unit of HS with way more additional features? However, the car is already loaded and what can be the new features?
• Was SAIC giving exclusive rates to MG Pakistan earlier?
• If the second scenario is true, is it there another under invoicing issue on the horizon?

Currently, I fail to understand the math. Until and unless, I am unable to decode the data OR one CKD kit is for assembly of two cars. I want to ask the readers, if they understand this calculation. Please, Share it in the comments section.

Is it Dumping?

As per financial laws, no company can sell a product less than its manufacturing cost. Some companies do it to capture other markets to create a monopoly. Hence, the question, is SAIC trying to dump its product in Pakistani market? If this is the case, there is a strong need of anti-dumping policy in Pakistan because it could be very harmful for the local car market. The federal government should take a serious notice of this whole scenario and launch an investigation. The probe will surely unearth the truth, whether MG Pakistan is right or I have missed something in reporting this article?

Response by MG:

I have asked MG Pakistan as I couldn’t understand this difference.  Currently, their official response is awaited.  Once it is arrived, I will add it in this story.