Prices of These Cars Will Increase After The Regulatory Duty Hike

The autumn of price decreases has departed, taking with it car buyers’ short-lived elation.

The depreciation of the local currency increased costs of freight and raw materials, and the global shortage of semiconductor microchips has wreaked havoc on the Pakistani car industry, compelling it to increase the prices yet again.

While car companies have devised plans for increments in prices of locally assembled vehicles, those that are still selling Completely Built-Up (CBU) vehicles are facing tax rates hikes.

Ministry of Industries and Production has issued a proposal to the Tariff Policy Board, recommending imposition of up to 50 percent Regulatory Duty (RD) on the imports of CBU electric vehicles (EVs), hybrid electric vehicles (HEVs), and regular internal combustion engine (ICE) vehicles to reduce the increasing import bill and current account deficit.

The government seeks to impose higher RD and other tariffs on the following:

• CBU Electric Vehicles (EVs) with battery packs over 50 kWh.
• Combustible fuel-powered CBU vehicles (engine displacement unspecified).
• CBU vehicles with hybrid powertrains with engine displacements between 1501cc and 1800cc.
• SUVs with engine displacements of 1501cc and above (a federal excise duty increase from five to ten percent has been proposed).

This implies that the prices of CBU vehicles could increase drastically if the government enacts the tariff increase. Although nothing has officially been said or done in this regard, it is speculated that the prices of the following popular vehicles are likely to increase across Pakistan:

While there are other companies in Pakistan, such as Mercedes Benz, BMW, Audi, and Porsche, that could also have been added to this list, they offer very expensive niche cars that only the elite class buy. This is why the demand for these cars won’t be affected by these price hikes.

For the companies mentioned in the table, the government’s plans to increase the import tariffs on CBUs do not bode well. MG, Haval, and Proton in particular still rely heavily on the sale of CBU vehicles, which implies that the increase in import tariffs and the price hikes that will follow will greatly hamper the demand for their vehicles.