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Tuesday, September 19, 2023

Hyundai increases car prices in Pakistan after govt imposes taxes

According to a notification issued by the taxation department, the provincial government has increased the tax on vehicles with higher engine capacity. The tax on cars over 1000cc has been increased to Rs100,000 from the existing Rs50,000, the tax on vehicles ranging from 1001cc to 2000cc also increased to Rs200,000 compared to the existing Rs100,000 tax while those of 2001cc and above will pay Rs400,000 in taxes.

The car industry is progressively succumbing to the mini-troubles, budget’s and other enterprises are increasingly surrendering to the tax rate hikes. Hyundai Nishat has not yet disclosed its new vehicle prices, but given its high-end selection, the increases are likely to be significant.

Three of Hyundai’s cars (the Tucson, the Elantra, and one variant of the Sonata) are in the 1,301cc to 2,000cc category, which implies that they will be subjected to a Federal Excise Duty (FED) hike of 2.5 percent (from 2.5 percent to 5 percent), as well as the increased sales tax.

Read more: Hyundai Cars Bringing its Best New Affordable Cars to Pakistan

Will price increases affect the sales of Hyundai cars?

Hyundai Nishat has done relatively well in its recent sales due to the high demand for the Elantra and the newly-launched Sonata. It posted a month-on-month (MOM) growth of two percent and a handsome year-on-year (YOY) growth of 49 percent in sales, having sold 762 vehicles in December.

The surge was partly attributable to a 369 percent year-over-year increase in Tucson SUV sales. Regardless, it will be interesting to watch if the company can maintain its slow rise with the aforementioned price hikes on the horizon.

The price of the Hyundai Elantra in Pakistan has been increased to Rs. 4,399,000 from the previous rate of Rs. 3,999,000. This means that the price of the vehicle has been hiked by Rs. 400,000. It is pertinent to mention that Hyundai Nishat Motors is offering just one variant of the Elantra in Pakistan.

Read more: Top Hyundai Premium Cars Launching in Pakistan: Complete Price & Specs List

The company has also increased the Price of the Hyundai Porter (aka Hyundai H-100) by flat Rs. 150,000 for all variants. The following table shows the new Price of Hyundai Porter in Pakistan.

Is KIA taking over Hyundai?

Research analyst Adnan Sami Sheikh said that this price increase can impact the company’s sales as out of new players, KIA is more famous and customers can switch the brand.

“Own money on cars will not be affected as people who want early delivery will pay extra money no matter how much it increases,” said Sheikh.

Own money is a price an investor charges from a customer who wants to buy a vehicle immediately. It is higher than the actual price of the vehicle.

Read more: Hyundai Pakistan rolls in two new cars

Sheikh says that the dollar rate was Rs157 in June and it has now reached Rs175.70 indicating a 10% increase in the rate. Whereas, companies have increased car prices by 5%.