By Shahab Omer
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or the longest time, the only 800cc car in Pakistan was the Suzuki Mehran. That timeless machine that launched millions of car enthusiasts either into an enraged frenzy or nostalgic murmurings. When it was first launched in 1989, the Suzuki Mehran was priced at Rs 90,000. By the time it was discontinued in March 2019, it was retailing at Rs 750,000. In a thirty year period. The storied history of the Mehran can be told as the history of the automobile industry in Pakistan. And while that is a whirlwind in its own right, its discontinuation is promising. The Mehran was a tin-box of death on wheels with zero quality assurance whatsoever. With it gone, Suzuki has come out with the 650cc Suzuki Alto an automatic car built on the model of the Japanese refurbished cars that have made such a dent in Pakistan’s automobile industry. It is a much safer vehicle with more features and comfort. It is also significantly more expensive. However, for once, it is not just Suzuki or one of the Big Three (Suzuki, Honda, and Toyota) dominating the market. In the 800cc segment of cars, where there was once only the Suzuki Mehran in Pakistan, there are now new entrants. Pakistani motorcycle manufacturer, Road Prince, in
AUTOMOBILES
partnership with a Chinese company, has recently introduced an 800cc Prince Pearl in Pakistan. Another manufacturer, United, has also introduced the 800cc United Bravo. And this was all before the latest budget, which if it is any indication, might mean a boom in the manufacturing and sales of this category of car.
What does the budget change?
I
n the budget speech, the government has proposed a reduction in sales tax on vehicles up to 850 cc and abolition of FED (Federal Excise Duty). This, of course, has caused a few heads to turn. The proposed big cuts in taxes and duties will also reduce the prices of these vehicles. However, the problem is that none of these companies have yet announced the official price of the car at a lower price. All these three vehicles are assembled entirely in Pakistan and according to the budget proposals, FED on them will be completely abolished while sales tax will be 12.5%. However, the benefits are not just for the local assemblers. A lot of cars in the 850cc category are also imported from Japan after being refurbished. These cars, often known as ‘Japani Alto’ include cars like the Mira and the Suzuki Hustler. Withholding tax on such imported vehicles has been abolished.
It is pertinent to mention here that 2.5 percent FED is levied on the production cost of each vehicle manufactured in the local factories, which will be abolished in case of approval from the National Assembly. If both proposals are approved, there is a good chance of a 7 percent reduction in the prices of 850 cc and lower power vehicles manufactured in Pakistan. The Suzuki Alto is currently priced between RS 1.2 million to RS 1.6 million depending on its variant, and if the budget proposals are approved, the price of the Alto is likely to fall by RS 84,000 to RS 132,000. Similarly, the average price of a Prince is RS 1.149 million, which will be reduced by about 80,000 after a 7 percent reduction. Bravo manufactured by United Company is priced at around RS 1.1 million in Pakistan, which is likely to be reduced by about RS 80,000. Experts in the automobile sector believe that the reduction in taxes and duties will lead to a reduction in car prices, which will further strengthen the automotive sector. Ali Asghar, a small businessman from Faisalabad, was one of the many people that decided immediately that they would buy one of these cars when they heard the announcement in the federal budget speech that a proposal has been made to abolish FED (Federal Excise Duty) on vehicles up to 850 cc and the sales tax rate has also been reduced from 17 per cent to 12.5 per cent. However, his experience has been
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