The capacity of the local auto industry is expected to increase from 285,000 cars to 600,000 by 2021.
Indus Motor Company CEO, Ali Asghar Jamali, unveiled this in a meeting of the Senate Standing Committee on Production and Industries. He suggested that the government should start a wholesale-retail mechanism, a practice worldwide, to increase the auto sector’s efficiency.
Jamali said that the wholesale-retail mechanism can also curtail the imposition of premiums that is a burden on the end users. He said that the current motorization rate, i.e., 18 cars per thousand persons marks the existence of the huge potential for the auto industry, as, by 2025, the size of the Pakistan market will reach 5.35 million units.
The CEO also said that Pakistan’s tax system does not allow the car companies to sell cars to wholesale dealers. After booking a car, the buyer in Islamabad will have to wait for the issuance of the car from the company in Karachi.
From booking to delivery, the process can take a month or even more. The dealers leverage this situation, as they book the car on their name and then sell it for a higher price.
The members of the committee asked Jamali about his company’s plans to cope with the increased demand. The company chief told them that the company has invested a hefty amount of $126 million to increase the capacity to 60,000 cars every year.
He said that the company has the capability to produce 80,000 vehicles over time. He also requested the members to reconsider the recent federal excise duty on vehicles above 1700cc.
Jamali said that the recently imposed duty was not in line with the auto policy. Levying the duty will not only impact the sales of vehicles but would also impact the government’s revenue collection.