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Express Tribune
21 hours ago
- Automotive
- Express Tribune
Passenger car sales jump 32% in 11 months
Listen to article Passenger car sales increased by 32.1% to 94,388 units during the first 11 months of the current fiscal year compared to the same period in the previous year on account of a variety of reasons, including a dramatic fall in interest rates, back-to-back Eid festivities, anticipated price hikes ahead of the federal budget 2025-26, and others. According to data released by the Pakistan Automotive Manufacturers Association (PAMA), sales of all vehicles, including two-, three-, and four-wheelers, increased; however, sales of farm tractors declined. Sales of jeeps-cum-pickups rose by 66% to 31,706 units. Sales of trucks and buses increased by 95.7% to 3,776 units and by 73.3% to 719 units, respectively. Sales of motorcycles and rickshaws also surged by 30% to 1,378,131 units. However, sales of farm tractors fell by a dramatic 36.8% to 26,401 units. Automobile consultant and expert Shafiq Ahmed Shaikh said it augurs well that, excluding the tractor segment, other parts of the auto sector are gaining momentum as they are on an upward trend. This reflects that the auto industry is growing and regaining strength. "In my opinion, there are four main reasons. First, the reduction in interest rates — different banks and financial institutions are offering good and affordable instalment schemes. Secondly, owing to information and rumours ahead of the federal budget that vehicle prices will rise, sales have increased. Thirdly, during both Eidul Fitr and Eidul Azha, sales witnessed substantial rises as customers wanted vehicles during the Eid holidays to celebrate in a better way. Finally, credit for the significant rise in vehicle sales also goes to improved law and order, which has supported the industry, along with favourable government measures allowing the industry to flourish. In my opinion, the auto industry has the potential and capacity to grow. We foresee that the existing industry will face stronger competition from electric vehicles (EVs), as the future will mainly depend on EVs," he said. Auto sector analyst Mashood Khan said all segments of the automotive industry performed well except for the tractor segment. The motorcycle industry has continuously gained strong momentum throughout the year due to the middle class, which cannot afford expensive four-wheelers. When it comes to the auto industry overall, it has started regaining strength. Meanwhile, raising concerns about the recently announced federal budget 2025-26, MG Motors Pakistan General Manager (GM) Marketing Division Syed Asif Ahmed said the industry is seeking clarity on the budget. Hybrid Electric Vehicles (HEVs) enjoy 8.5% GST compared to 18% on EVs. This anomaly has existed for many years, giving HEVs an advantage over EVs. "Social media has reported an increase in the GST for HEVs from 8.5% to 18%. If true, this will jeopardise the huge investments made by almost all automakers in HEVs. The Finance Bill is silent on the subject, despite the Automotive Industry Development and Export Plan (AIDEP) 2021-26 commitment of no change in tariffs until June 2026. What is needed is for EV GST to be reduced to 8.5% to match HEVs," he said. He added that used car importers are abusing the gift, baggage, and transfer of residence schemes for commercial trading. Allowing commercial imports of five-year-old used cars with reduced Regulatory Duty (RD) will distort the playing field against local assemblers.
Express Tribune
2 days ago
- Automotive
- Express Tribune
Auto sector divided on new budget
Listen to article Auto sector experts and consultants expressed serious reservations about the finance minister's budget speech and called for reviewing the federal budget before seeking approval from the National Assembly (NA). Talking to The Express Tribune, Auto Sector Expert Mashood Khan said the finance minister's budget speech closely mirrors the International Monetary Fund's (IMF) recommendations. The downward trend in additional customs duty, regulatory duty and customs duty will likely hit local manufacturing instead of exports in the future. Severe consequences for the local manufacturing industry may be predicted and witnessed. Without a thriving domestic industry, the import bill will surge, and foreign reserves will take a hit. The auto parts and other manufacturing sectors will face major challenges. It is unclear how exports will increase without a robust local industry. "I urge the federal finance minister to revisit the budget before seeking approval from the National Assembly. Without a supportive industrialisation policy, local manufacturing will struggle, and exports will suffer," he said. Moreover, Economic Strategist and Regional Expert Dr Mehmoodul Hassan Khan said the pledges for the creation of effective incentives and essential tax exemptions for the adoption and use of electric vehicles (EVs), contributing to the national goal of 30% penetration for new passenger EV sales and 50% for two- and three-wheelers by 2030, represent a paradigm shift towards a massive green transformation. Additionally, reducing taxes on five-year-old vehicles is a step in the right direction, making imports more affordable, which would provide some much-needed financial relief to common consumers in the country. The introduction of a holistic and comprehensive reform package, mainly gradually phasing out additional customs duty on vehicles and reducing regulatory duties, will also be beneficial for the local auto industry, creating a strategic balance between local and imported automobiles. The government's recommendation that no new regulatory duties be imposed on the auto sector and its proposal for an annual 10% reduction in tariffs on used vehicles is a constructive step having multiplier effects. The easy and smooth mechanism of issuance of licenses to 57 EV manufacturers for the production of two- and three-wheeler electric vehicles vividly reflects the strategic priority of the government in reducing carbon footprints and inching towards carbon neutrality. Meanwhile, contrary to the above-cited views, another leading automobile consultant and expert, Shafiq Ahmed Shaikh, said: "In my opinion, the federal budget is good and balanced. With reference to the auto sector, the recommended National Tariff Programme with the plan is good for Pakistan and a requirement of today. As I foresee, by gradually lowering import duties, in the future it will not only stabilise the local and international markets but also have to be competitive with the global industry." He said under the proposed tariff, the duties would come down to 15% from the current 20% over five years, whereas additional customs duty and regulatory duty will also be phased out. The government also plans to eliminate the Fifth Schedule and lower the maximum slab rate to 15%. This is a good overhauling of the trade regime and will definitely foster export-led growth. This was also the requirement of the IMF, which seeks to bring Pakistan's tariff structures in line with global norms. Now, through revolutionary changes, not only will policy stabilisation come, but easy access to international supply chains will also be opened. "At present, this sector contributes around 4% of total tax revenue. I foresee that by taking the tariff rationalisation route, more revenue will be generated," he said.
