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Business & Finance

MG car prices likely to go up after increased customs duty

  • Morris Garage (MG) Motors had created a lot of hype in the Pakistani auto market with its affordable cars.
  • However, the prices of its cars are likely to go up significantly after a rough patch with FBR.
04 May 2021

Morris Garage (MG) Motors has created a lot of hype in the Pakistani auto market with its affordable cars. However, the auto manufacturer seems to have hit a rough patch.

Recently there were reports of unhappy customers at one of MG’s flagship dealerships in Lahore. Now, there is an issue of recoverable customs duty payments. These payments were imposed by the Federal Bureau of Revenue following an investigation. This development is assumed to foreshadow a price hike in MG cars, currently known for their very affordable price tags.

When the issue was picked up by FBR back in February 2021, MG Pakistan head Javed Afridi called the bad buzz rumors by market competition to slash MG Motors for providing better vehicles at better prices.

“As new entrants bring in exciting new models at far lower prices, instead of competition, we expect maligning campaigns and baseless rumors, … We invite everyone to join in a fair competition to serve Pakistani consumers with a bigger and better variety of vehicles at lower prices,” he tweeted.

The MG Pakistan Chief also said Pakistani automobile consumers have been exploited by “cartels” for a long.

However, the reason a price hike is expected is the new customs duty. As per details, the JW SEZ (Pvt.) Ltd. was audited again by the Federal Board of Revenue (FBR) over the allegations of under-invoicing on 747 SUVs imported from China through SAIC Motor.

As per the findings of the initial audit process, JW SEZ (Pvt.) Ltd. had brought in 747 MG CBUs between November 2020 and February 2021. The initial consignment had declared the unit price of MG HS to be $14,000, whereas those of the MG ZS and the MG ZS EV were $9000 and $22,000 respectively. However, the unit price of MG HS CBU was found to be $ 11,632, and that of the MG ZS base variant was $ 9,245.

Subsequently, the Federal Board of Revenue (FBR) has reportedly bumped up the assessable customs value of the MG SUVs by 14.5 percent over the weekend by means of a ‘Fall Back Method’ as provided under Section 25(9) of the Customs Act, 1969. After the hike, the customs value of the vehicles has gone from $11,632 per unit to $13,314 per unit.

The development may force MG Pakistan to increase prices for those vehicles not yet delivered from this pool, especially to the customers who placed their order on partial payments.

Any more vehicles currently in transit or on port awaiting clearance will automatically be accessed as per the new customs value of $13,314. Although there has not been any official statement in this regard the bump in customs value can result in an increase in the sticker price.

It is pertinent to mention that MG Motors Pakistan has closed the booking of MG HS on 19th March. Though there are some MG dealers that are still taking bookings with no delivery time insight resulting in over bookings.