Minister for Industries Khusro Bakhtiar said on Wednesday that new reduced car prices would be implemented in a few days to reflect the tax and duty cuts on automobiles in the budget for fiscal year 2022.
Addressing a press conference in Islamabad with Information Minister Fawad Chaudhry on aspects of the new auto policy, the federal minister named several cars from different categories and the respective price reduction they would see.
"Implementation of new prices for all these cars will be done in a day or two," he said, adding that a notification in this regard would be issue soon.
He said this would cause a sudden increase in demand in the automobile sector as well as an increase in car production. "I also want to deliver the good news that as we increase car production then around 300,000 new jobs will be provided in this [automobile] sector this year."
Bakhtiar said efforts were being made to increase automobile production to 300,000 cars this year and increase their demand through incentives and other measures.
"The biggest incentive for this [automobile] sector was that demand increases when prices are reduced. So the government has removed federal excise duty (FED) and additional customs duty (ACD) on cars along with reduction of sales tax on small cars," said Bakhtiar.
In the Finance Bill 2021, the government had cut FED on all vehicles up to 3,000cc by 2.5 per cent while abolishing it on vehicles from 660cc to 1,000cc. The general sales tax was also slashed to 12.5pc from 17pc for cars up to 1,000cc.
The government had also reduced ACD on all vehicles from seven to 2pc and a notification in this regard was issued on June 30. These measures were aimed at providing some relief to the customers from July 1, but so far the prices have been intact to their previous levels.
Auto assemblers have been dragging their feet in passing on the price cut benefit to consumers. Almost all the assemblers have ganged up to delay the price benefit to the consumers linking it to the non-release of any statutory regulatory order or any notification on FED and GST after passage of the Finance Bill 2021.
Other measures to encourage demand
Bakhtiar also elaborated on other measures being taken to increase car demand such as creating ease for first-time car buyers. He said upfront payment had been set at 20pc of the total value and added that the process for lease would be made easier as well in the future.
The federal minister explained that car manufacturers would also be made to pay penalties to customers if they delayed vehicle delivery beyond 60 days and customers would be able to check online the current manufacturing stage of their vehicle.
He said the government's focus was now on improving car quality, such as the introduction of modern safety features, which would eventually make the automobile sector export-oriented.
The new auto policy would be presented before the Cabinet in the first week of August, he said, adding that measures for hybrid and electric vehicles had been taken in it as well.
"The import [duty] on electric vehicles has been reduced to 10pc from 25pc so they arrive in Pakistan and their infrastructure such as charging stations can be developed."
The federal minister also addressed motorcycle production and said 2.6 million units had been produced this year which would be increased to 3m next year. He added that 75,000 job opportunities would arise from this mostly in rural areas.
It was necessary to increase the country's engineering and manufacturing base to keep growth sustainable, Bakhtiar stressed, adding that the government was focused on localisation now. He said localisation was focused upon in the new auto policy as well.