In the recent budget for the upcoming fiscal year 2021-22, one of the sectors that have gotten major government support is the automobile sector of Pakistan.
In the budget speech on 11th May Finance Minister Shaukat Tarin mentioned two major highlights, namely the introduction of the EV policy to incentivize the manufacturing and introduction of electric vehicles in the Pakistani market, and the reduction in taxes for cars with power less than 850cc.
The latter budget reform means a drop in prices for the low-end city cars for the customer, which would increase their affordability for the masses of Pakistan.
The Finance Minister of Pakistan announced the removal of Federal Excise Duty (FED) on cars, and the Sales Tax has been reduced from 17 percent to 12.5 percent on cars with engines smaller than 850 ccs.
Here are the car prices following the ‘consumer-friendly reform’, in the new budget.
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The Price changes
Pakwheels, a renowned Pakistani auto blog mentioned that the price of the Suzuki Alto VX would drop Rs74,000 from an old price of 1,198,000 to 1,124,000. Similarly, the price of the Alto VXR would decrease Rs88,000 from Rs1,433,000 to Rs1,345,000. Lastly, Alto VXL used to sell at Rs1,633,000, however, it will now cost Rs1,530,000.
Similarly, the old price of Prince Pearl was Rs1,149,000, and the new low price is Rs1,077,000. Similarly, United’s Bravo previously was at Rs1,099,000 and the new price would be Rs1,030,000.
The Suzuki Bolan came in two variants in the local market, i.e., Bolan Cargo Van Euro II and Bolan VX Euro II.
The price of the Cargo Van was Rs1,075,000, and according to Pakwheels, it will now cost Rs1,010,000. Meanwhile, the previous rate of Bolan VX was Rs1,134,000 and its new price is Rs1,065,000.
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Electric Vehicle Policy
Pakistan has also passed the EV Policy to cater to the increasing demand for environmentally friendly transport. Electric Vehicles (EVs) have inherent design advantages that are helping propel these vehicles from obscurity to mainstream options in just under a decade.
These vehicles have much simpler drivetrains with fewer moving parts (about 20 moving parts in an EV compared to 2,000 for internal combustion engine vehicles), which makes these vehicles cheaper to maintain as fewer parts break and need servicing.
The electric drivetrain is also significantly more efficient than the internal combustion engine. EVs convert over 77% of the electrical energy from the grid to power at the wheels. Internal combustion vehicles only convert about 12%–30% of the energy stored in gasoline to power at the wheels.
In late May, Federal Minister for Industries and Production Makhdoom Khusro Bakhtyar said the new policy would focus on growth and development of the automotive industry together with affordability, quality, availability, and indigenization.
It is worth mentioning that the local industry has sought the government’s support and a policy for hybrid electric vehicles (HEVs). According to the industry, HEVs are a better option for consumers than electric vehicles (EVs).
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It remains to be seen how the new Auto Policy (2021-26), which is to be enacted from July 2021 onwards, helps the auto industry of Pakistan get more indigenous and affordable for the masses.