News Analysis |
Prime Minister Shahid Khaqan Abbasi met with a Member of the Board of Management Joseph Baumert at the Prime Minister House on Tuesday. Volkswagen is the largest car manufacturer in the world and this entrance into the Pakistani market has been appreciated all across the country by consumers and car dealers.
PM Abbasi assured the highest level of facilitation for the automaker by the government, mentioning how the government of Pakistan has been creating grounds for foreign investors for the past four years.
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The Prime minister expressed his utmost hope that Volkswagen will be able to provide good quality vehicles to the Pakistani consumers. He also said that with the quality of road infrastructure improvements with the China Pakistan Economic Corridor, there is room for a lot of improvement in the auto sector.
Honda, Toyota, and Suzuki have been raising the prices of their vehicles, and the quality of vehicles seems to be dropping further each year.
The Pakistani automobile industry, which has long since long been dominated by three Japanese companies; Honda, Toyota, and Suzuki for the past several decades, has heaved a sigh of relief. This precedent will also accommodate other non-Japanese players to enter the market.
In June 2017, The Ministry of Industry and Production had allowed United Motors Private Limited, Kia-Lucky Motors Pakistan Limited, and Nishat Group to set up units for assembly and manufacturing of vehicles under the Greenfield investment category. The maximum investment of $190 million will be made by Kia-Lucky, followed by $164 million by Nishat Group and $18.1 million by United Motors.
In the hopes of attracting a European automobile manufacturer, the government in March last year had approved a new automobile policy, offering tax incentives to new entrants to help them establish manufacturing units and compete effectively with the three well-rooted Japanese assemblers.
Prime Minister Shahid Khaqan Abbasi met with a Member of the Board of Management Joseph Baumert at the Prime Minister House on Tuesday.
Other officials in the contingent included Volkswagen’s head of overseas production Andreas Spindler, head of Asia Pacific, Oliver Glaser, International Policy Foreign and Governmental Relations Klaus – Bo Steindorff and head of CKD Yuri Konushin, Premier Systems CEO Syed Arshad and Board of Investment secretary.
In June 2017, the three new entrants had faced opposition from the EDB, Engineering Development Board, which was setting hurdles in their path, disapproving their submissions over and over. Individuals in the auto-industry believed that this may have been due to pressure from the dominant players; Honda, Toyota, and Suzuki.
Honda, Toyota, and Suzuki have been raising the prices of their vehicles, and the quality of vehicles seems to be dropping further each year. Taking premiums from customers and delivering their vehicles late is not helping either.
They have also been using obsolete technology and raising the prices of their spare parts. The monopoly has been frustrating for the Pakistani consumers. PM Abbasi, taking notice of the situation disbanded the EDB in 2017 and approved the applications of the new entrants.
Volkswagen is the largest car manufacturer in the world and this entrance into the Pakistani market has been appreciated all across the country by consumers and car dealers.
PM Abbasi’s government has raised taxes on automobile imports. This move has halted the imports of various forms of vehicles that were the last resort for Pakistani consumers that had otherwise been coerced to buy over-priced, low quality Pakistani assembled vehicles. Some of the taxes levied are listed below, in accordance with categories:
- New Sport-Utility Vehicles (SUVs): 80% tax, up from 50%
- New Cars and Jeeps 1801cc-3000cc: 80% up from 50%
- New Cars and Jeeps above 3000cc: 80% up from 50%
- New All-terrain vehicles: 80% up from 50%
- New Cars and Jeeps Above 2000cc: 80% up from 50%
- New Cars and Jeeps Above 2500cc: 80% up from 50%
- New Other: 80% up from 50%
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These raised taxes have made the option of importing cars for Pakistanis increasingly difficult. With Volkswagen and other big car manufacturers stretching their wings, we can only hope that the market is going to change for the better and the people of Pakistan have the option of buying functional and reasonably priced cars.