Car prices in Pakistan to go up due to levy of Federal excise duty in budget 2019-20 Key factors for automobile prices are discussed below.
Federal Excise Duty – FED
Through Finance Supplementary (Second Amendment) Act, 2019, FED on locally manufactured/assembled cars of 1700 cc and above was introduced @10 percent. Now, in order to rationalize this levy, it is proposed to enlarge the scope of FED and following slabs are being proposed:
They introduce the following slabs in the recent budget for Cars.
- Cars from 0-1,000 CC at 2.5 percent
- Cars from 1,001-2,000 CC at 5
- Further more Cars from 2,001 and above at 7.5 percent
It is expected that cars will become more expensive. We expect that automobile manufacturers will increase prices.
Key Factors For Automobile Prices
The following are the Key factors for an automobile that every purchaser should keep in mind to keep a track and a better understanding.
1) FED has been levied as mentioned above for Cars from 0 to 1000 CC, 1001 to 2000 CC and 2001 CC and above. Consequently, the cost to the customer will increase.
2) The rupee has depreciated against the dollar by about 44% since December 2017 and continues the trend. Due to devaluation, the prices will go up.
3) Furthermore, interest rates have increased over the last six months, and it continues the trend.
Under these circumstances and present economic trends in Pakistan we would like to suggest as following to Car customers.
1) Buy economical cars low maintenance and great fuel efficiency.
2) Suzuki Alto is the ideal automobile under present circumstances.
3) If you are having an automobile on lease through Bank, try to pay the most advanced amount. It will cut down installments. In addition, it will cut down the impact of soaring interest rates.
4) Buy local assembly Automobiles only.
5) Do not opt for imported automobiles because of excessive cost and maintenance issues availability of spare parts. )
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Meanwhile, the local automakers also argued that not all parts of the cars are manufactured locally. So the automakers are forced to import parts from foreign vendors. Further more devaluation of the rupee have now made imports expensive.