The implementation of the mini-budget has forced automakers to increase the prices of their vehicles. As can be observed by certain revisions, most of the price hikes are a result of the increased Federal Excise Duty (FED) and sales tax rates.
The mini-budget focused on the auto sector due to a steep rise in vehicle imports that contributed heavily to the towering import bill. Resultantly, Completely Built-Up (CBU) vehicles have also been slapped with hefty regulatory duties while locally assembled vehicles are now subject to FED and sales tax hikes.
It is strange that the tax hikes have been enacted so that the prices of all the vehicles are liable to increase except for cars that have engine displacements between 1001cc and 1300cc.
For clarity, the FEDs on locally assembled cars are:
- Up from zero to 2.5 percent for 660cc to 1000cc vehicles.
- Remaining 2.5 percent for 1001cc to 1300cc vehicles.
- Increased from 2.5 percent to 5 percent for 1301cc to 2000cc vehicles.
- Up from five to 10 percent for vehicles over 2000cc.
Although Kia Lucky Motors has maintained its prices quite well since its arrival, it will also have to increase the prices of its vehicle due to the recent tax hikes. The following are the price hikes expected from Kia:
|Current Price (Rs.)||Expected Price (Rs.)||Increase (Rs.)|
|Stonic EX +||1400||3,880,000||3,974,634||94,634|
|Sorento V6 FWD||3342||8,203,000||8,593,619||390,619|
Kia Lucky Motors previously announced a price hike in November 2021 due to increased freight charges, raw material costs, and the devaluation of local currency. Interestingly though, amid that hike, the Sorento’s price remained the same.
However, that will not be the case this time as the government has announced a considerable tax rate hike for that segment, which is likely to drive the prices up significantly. The Overall demand for all cars except for Picanto, will likely remain the same due to the decent purchasing power of Kia’s targetted consumer segment.