March 29, 2008	Saturday	Rabi-ul-Awwal 20, 1429

KARACHI, March 28: Local carmakers have been pushing up prices after having pressured the caretaker government to withdraw a 2.5 per cent withholding tax aimed at improving car sales.

The latest increase has come from the Pak-Suzuki company which has made an increase of Rs10,000-20,000 in prices from April 1. Earlier, on February 1, the company had increased prices ranging between Rs5,000 and Rs20,000.

Similarly, the makers of Toyota Corolla twice increased prices during the last two months. They first made an increase of Rs10,000-20,000 on Feb 23, and a second similar increase on March 10.

The Pak-Suzuki Motor Company Limited (PSMCL) in its circular on March 26 has informed its authorised dealers about a revision in ex-factory prices.

The company has linked the price-hike to rising prices of steel components and petroleum products and also appreciation of Yen against Rupee which, according to the company, pushed up the production cost.

The company stated that they made their level best to absorb the negative impact of the rising production cost, but it had become impossible for them to further absorb the impact.

However, the company claimed that it did not pass on the full impact to customers and that it was still absorbing a substantial portion.

The company will also not charge the price difference on all pending orders received on or before March 31.

All-Pakistan Motor Dealers Association chairman H M Shahzad said that the carmakers misguided the government by pressuring it to defer the 2.5 per cent withholding tax owing to laggard sales.

He said sales and production faced turbulence between October and December 2007 due to political situation in the country, but it started recovering from January to February 2008 as per figures of Pakistan Automotive Manufacturers Association (Pama).

He urged the government to initiate a probe against carmakers for frequently increasing rates from February this year.

He said that the government suffered for two months by deferring the imposition of 2.5 per cent withholding tax (from February 21 to April 20, 2008), “but the carmakers in return increased prices.”

A car assembler said that Pama has urged the government to completely remove the 2.5 per cent withholding tax.

In case the tax is not removed after April 20, car prices would further go up by 2.5 per cent which would again make a negative impact on sales, the assembler said.

Carmakers had predicted an improvement in sales from March and April this year after the formation of a new government with the restoration of consumers trust.