- In letter addressed to prime minister, company wants reduction in duties and taxes for vehicles up to 1,000cc
As Pak Suzuki Motor Company (PSMC) navigates through the turbulent state of the country’s automobile sector, it has requested Prime Minister Shahbaz Sharif not to impose new taxes or increase existing levies in the upcoming 2023-24 budget. The government is set to present the budget for 2023-24 on June 9, 2023.
The company has also asked the premier to reduce duties and taxes of vehicles with up to 1,000cc engine capacity for “minimal survival”.
Pak Suzuki primarily operates in the low vehicle engine capacity segment (below 1,000cc).
It is the largest manufacturer of passenger cars and light commercial vehicles in Pakistan and possesses the largest dealership network and local vendor base.
“Here, we would like to bring to kind notice that Pak Suzuki Motor Company is going through a very worst of times in its history of about 40 years in Pakistan. The company has already suffered huge losses of Rs12.9 billion in the first quarter of the current year, due to the current economic uncertainties,” the company wrote in a letter to the prime minister.
A copy of the letter dated June 2, 2023 is available with Business Recorder.
The company wrote that it had been observing “no production days” every month this year.
“In addition to this, our dealers and vendors are also suffering due to the current economic and business situation and some of them have shut down while many more are on the brink of closure,” the letter added.
“As we continue to fight for our survival, we request the government not impose any new duties and taxes in the upcoming federal budget, especially on vehicles of up to 1,000cc engine capacity, the product of the masses.”
Pak Suzuki is one of the most affected car companies from the economic crisis as it mainly operates in a price sensitive segment.
Meanwhile, there are reports that the government might increase taxes on the auto sector.
Separately, Pakistan Automotive Manufacturers Association (PAMA) has also written a letter to the Federal Board of Revenue (FBR) fearing that the upcoming budget may see a change in the basis of levy of withholding and other taxes and duties on the locally assembled cars.
There are reports that the government may change the basis for charging withholding tax from engine-size to invoice price of the automobile.
Much like the economy, Pakistan’s auto industry is also passing through turbulent times. It is one of the sectors most affected by rapid depreciation of the rupee and letter of credit (LC) issues, which arose due to depleting foreign exchange.
On the back of multiple rounds of price hikes, inflation, high interest rates and supply chain issues, car sales have dropped significantly.
According to the latest data released by PAMA, car sales dropped to 2,844 units in April 2023 against 18,626 units in April 2022.