Earlier this month, Millat Tractors Limited — Pakistan’s biggest tractor manufacturer — closed its doors till further notice, citing “continuing reduced demand of tractors and cash flow constraints,” as the reason for the indefinite shutdown.
The news of its shutdown and several others sent shockwaves throughout the industry and the public, leaving everyone worried. Fortunately, the company has issued a notification stating that it will restart its operations on January 16, 2023.
Tax Reduction on Commercial Vehicles
This development comes shortly after the federal government decided to reduce the registration tax for commercial vehicles in the Excise and Taxation department of Islamabad Capital Territory (ICT).
The federal government decreased the registration tax for commercial vehicles from 4% to 1%. According to a press release issued by the Islamabad Capital Territory’s (ICT) department of Excise and Taxation, the decision was made to provide citizens with maximum relief.
Recently, the State Bank of Pakistan (SBP) also eased the import sanctions on Completely Knocked Down (CKD) kits for local car assemblers. This decision is to enable the auto sector to restabilize its production and sales.
A Grim Foresight
Due to the ongoing situation, analysts believe that car sales will remain sluggish for the remainder of FY 2022-23. They reckon that due to a current dearth of essential items, the government will likely keep the auto-sector development on the back burner.
An IIS report states:
We remain conservative on the auto sector sales for the remaining part of the fiscal year. Not only the demand will remain subdued, but the supply side will remain under serious pressure owing to the depleting foreign exchange reserves and the will to bring the Current Account Deficit (CAD) under control.
With this foresight, the chances of any significant development in Pakistan’s auto sector seem bleak.
