Did some calculations on some assumptions and available data. I am not a financial expert. I am just doing a simple math.
As per FBR tax code 8703.2290 , there is a Fix duty of $18590 on model from 1300 to 1500cc. Again this duty is for old and used car as per FBR. I am not sure how much it would be on new but I believe it would not be less. So i just used the same number.
MG HS fits in it 1300-1500 bracket.
Just duties/ taxes of $ 18,590 = PKR 2,965,850/-
for green field status there is 50% rebate on 100 units, means = PKR 1,482,925/-
Current MSRP for MG HS is PKR 5,449,000 [ WHT additional + freight ] assuming no profit and no loss.
The MSRP normally also have the margin to company , dealers margins, profits , overheads , marketing, sales and other + including the cost of shipping freight @ import. Lets assume all these as "ZERO".
5449000-1482925 = PKR 3,966,075. [ subtracting the 50% duty from the sticker price ]
Now add full duty to the 3,966,075 + 2,965,850 = PKR 6,931,925 [ Importing CBU at full force of duty ]
Loss per unit = 6,931,925 - 5,449,000= PKR 1,482,925/ - and this does not include the overheads.
Lets says all the overheads are PKR 500,000/- per unit.
Total of losses = 1,482,925 + 500,000 = PKR 1,982,925
1000 units means = 501 Million Rupees in losses just by selling a single model.
As a reference, the average price of the MG HS is around GBP 25,000 in UK [ if we see the options and features available on MG HS for sale in PK ] which means around PKR 5,352,790/-
This means that MG in Pakistan is already getting a vehicle from SAIC at a subsidized price.
Honestly, if MG is taking a risk of almost half a billion, if we assume the confirmed bookings of 1000 units, I am not sure how the company can justify this to investors , banks and other financial institutions related with the company . You either transfer your profits from other units to equalize these loses or just burn cash OR the principal/ SAIC is giving these units for free to Afridi sahab. Remember SAIC already reported decline of profits around 28% for 2019 and 2020 is not going good either because of low sales.
Keep in mind they need to make investment towards the CKD assembly, that also cost billions , I dont know what would be timeline for return of investment. The company will start CKD with billions in negative and that too with the competition not going anywhere from market.
I hope and wish best for MG..
Thoughts ?? Corrections??
