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Category: Automotive

PkRevenue provides stories related to automotive industry. We focus on auto policy of Pakistan. The coverage also includes sales of domestic manufacturing.

  • FPCCI proposes duty free import of used cars for subsequent export

    FPCCI proposes duty free import of used cars for subsequent export

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed duty free import of used cars and their subsequent export after repair.

    The apex trade body in its proposals for budget 2020/2021 said that the UAE had developed Export Processing Zone (EPZ) for duty free import of used cars, their repair and subsequent export to different countries especially those of Africa.

    “On similar pattern a ‘Used vehicles EPZ’ be set up in Karachi, Port Qasim or Gwadar and import of both right hand and left-hand drive vehicles may be allowed under this EPZ for their export to different countries. Because of its more feasible sea route to Africa and land route to Central Asian markets, cheap labour, painters and mechanics, the proposed EPZ may turn out to more attractive than the ones in UAE.”

    The FPCCI also highlighted issue of import of stock lot and job lot goods. The apex trade body said that despite the fact that stock lot and job lot goods are available in the world at lower prices, but for the protection of local industry, their import is banned.

    Maintaining the ban for home consumption, permission may be granted for import of stock lot and job lot goods under Export Facilitation Schemes on 100 percent export basis.

    The FPCCI also said that import of used clothing and their exports after sorting, repair, washing and packing is allowed to exporters operating in EPZ.

    However, this facility is not allowed under DTRE scheme and is denied under other Export Facilitation schemes too. If the same is allowed, Pakistan can capture a bigger share because of its cheap labour.

    The FPCCI said that the global warehousing market is more than $ 1.0 trillion and is growing at a very fast pace. The Export Policy Order vide para 9(g) allows export of imported goods in same state – unprocessed form from bonded warehouse and the imported goods already cleared from home consumption.

    The FPCCI said that this is not in line with this global business practice. “Singapore, Malaysia, Sri-Lanka and a number of other countries allows such export, which helps in earning FE and generates employment,” it added.

    The issue is that re-export of imported goods in the same state is allowed but there is no procedure which allows refund of duty and taxes paid, neither such imports are covered under DTRE or any other export facilitation scheme (manufacturing bond, temporary imports, export oriented unit etc).

    No importer can import goods, ware house it and re-export after payment of import duty and taxes. He can re-export to mitigate his loss but cannot adopt it as a business to utilize cheap warehousing in Pakistan.

    It proposed the Ministry of Commerce and FBR to allow import for re-exportation under DTRE Rules subject to value addition of 5percent or 10 percent.

  • Car manufacturers resume operation as lockdown eases

    Car manufacturers resume operation as lockdown eases

    KARACHI: Automobile industry has resumed manufacturing and administrative operations after the government eased lockdown.

    Honda Atlas and Indus Motors on Tuesday informed Pakistan Stock Exchange (PSX) about resumption of their manufacturing operations.

    The Indus Motors Company in its letter said:

    “With reference to our earlier disclosure of material information dated 27 March 2020, relating to the temporary suspension of plant operations of the Company due to outbreak of the COVID-19 in the country.

    “The management of the Company according to relaxation/approval given by the Sindh Government has decided to resume plant operations and its offices with adequate measures aimed at preventing the pandemic’s spread.”

    Similarly, Honda Atlas Cars (Pakistan) Limited in its letter said:

    “In view of the relaxation allowed to automobile Industry from the current situation of lockdown due to COVID-19, by the Authorities, Honda Atlas Cars (Pakistan) Limited has resumed its operations from May 19, 2020 with all precautionary measures aimed at preventing pandemics spread.”

  • Motor vehicle tax collection plummets by 15 percent to Rs16.73 billion

    Motor vehicle tax collection plummets by 15 percent to Rs16.73 billion

    ISLAMABAD: The collection of motor vehicle tax has registered 15 percent decline during first nine months of current fiscal year, according to data released by the ministry of finance.

    According to fiscal operation for first nine months issued by the finance ministry showed that the provinces had collected Rs16.73 billion during July – March 2019/2020 as compared with R19.64 billion in the corresponding period of the last fiscal year.

    The provinces have mandate to collect motor vehicle tax.

    The lower collection of motor vehicle tax attributed to slowdown in economy and the cases of coronavirus started appearing in the month of March 2020, which resulted in lockdown.

    The major slump in collection recorded by the Punjab province, which posted 19.5 percent decline to Rs9.55 billion during first nine months of current fiscal year as compared with Rs11.87 billion in the same period of the last fiscal year.

    The Sindh province posted 4 percent decline to Rs5.52 billion during July – March 2019/2020 as compared with Rs5.75 billion collected in the corresponding period of the last fiscal year.

    The collection of motor vehicle tax by Khyber Pakhtunkhwa registered 18 percent decline to Rs1.14 billion during first nine months of the current fiscal year as compared with Rs1.39 billion collected in the same period of the last fiscal year.

    The province of Balochistan collected Rs515 million during first nine months of current fiscal year as compared with Rs615 million in the same months of the last fiscal year, showing decline of 16 percent.

  • Car import registers 148 percent growth amid coronavirus pandemic

    Car import registers 148 percent growth amid coronavirus pandemic

    KARACHI: Import of motor vehicles in completely built-up unit (CBU) condition registered phenomenal growth of 148 percent in April 2020 despite restrictions to foreign trade owing to lockdown for preventing coronavirus pandemic.

    According to data released by Pakistan Bureau of Statistics (PBS) the import of motor vehicles in CBU condition increased to $10.77 million in April 2020 as compared with $4.34 million in the same month of last year.

    Sources said that due to coronavirus pandemic many overseas Pakistanis opted to return homeland and they brought household along with them.

    It is interesting to note than due to the pandemic most of the imported goods registered massive decline in the month of April 2020 due to restrictions imposed on the foreign trade.

    Whereas, the lockdown imposed in the country not a single locally manufactured car was sold during April 2020.

    The commercial import of motor car is not allowed in Pakistan. However, overseas Pakistanis are allowed to bring motor car under three different ways including personal baggage, transfer of residence and gift schemes.

    The import of CBU motor vehicles registered 64.58 percent decline to $75.57 million during first ten months (July – April) 2019/2020 as compared with $23.37 million in the corresponding period of the last fiscal year.

    The overall decline in import of motor vehicles can be attributed to measures taken by the government to discourage misuse of the facility which is only allowed to overseas Pakistanis.

    Last fiscal year the government brought changes to these schemes and customs clearance of imported cars under these schemes only through payment made out of foreign exchange, which should be verified by banking system.

    Recently, the ministry of commerce through a SRO issued on December 30, 2019 amended in payment system for clearance of imported cars under which local resource could be utilized in case of shortage of payment due to enhancement of exchange rate fluctuation or enhancement in duty rate etc.

    The import of motor vehicles in completely knocked down (CKD) condition registered 40 percent decline to $405.6 million during first ten months of current fiscal year as compared with $678.76 million in the corresponding period of the last fiscal year.

    Industry sources said that the decline in motor vehicles in CKD condition was due imposition of duty and taxes in the last budget, which resulted in hike in prices of locally manufactured cars.

    Besides, slowdown in economy in pre-Covid and later imposition of lockdown to prevent coronavirus spread also discourage the sales of locally manufactured motor cars.

  • Not a single car sold in April 2020

    Not a single car sold in April 2020

    KARACHI: Automobile manufacturers have witnessed worst-ever month as not a single car was sold during April 2020 owing to lockdown imposed by the federal and provincial governments to prevent coronavirus pandemic.

    The lockdowns due to COVID-19 imposed by the Federal and Provincial governments in the later half of Mar-2020 till date has resulted in no car sales during Apr-2020, as reported by Pakistan Automobile Manufacturers Association (PAMA).

    The lockdowns has resulted in closure of plant operations along with car dealerships across the country.

    As a result, in 10MFY20 car sales have declined by 52 percent YoY.

    Honda Car (HCAR) sales are down by 64 percent YoY, followed by Indus Motors (INDU) and Pak Suzuki Motor Company (PSMC) with declines of 54 percent YoY and 47 percent YoY, respectively.

    ATLH (motorbikes) too recorded nominal sales of 2,783 units compared to pre-COVID sales of around 100k units.

    Keeping in view the importance of the Wheat harvesting season, the governments allowed the tractor industry to resume their operations in mid-April-2020.

    The tractor sales during Mar-2020 recorded a decline of 63 percent YoY and 30 percent MoM.

    Al Ghazi Tractors (AGTL) reported an increase of 19 percent MoM in its sales, while Millat Tractors (MTL) sales declined by 51 percent MoM. Last month, MTL sales were up MoM (+2 percent) whereas AGTL recorded a MoM decline (-22 percent MoM).

  • FED on locally manufactured vehicles proposed to be withdrawn

    FED on locally manufactured vehicles proposed to be withdrawn

    KARACHI: Local automobile manufacturers have urged the Federal Board of Revenue (FBR) to withdraw federal excise duty, which will help in rationalizing prices in domestic market.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 said that the Finance Act, 2019 revised FED on all categories of locally manufactured motor vehicle (Motor car & SUVs, 8703 category) as follows:

    VehiclesFED
    Up to 3 to 1000CC2.5 percent
    1001CC to 2000CC5 percent
    2000CC and above7.5 percent

    The OICCI said that this had resulted in significant increase of the sales price of the vehicles with consequential reduction in sales volume of the respective vehicle categories.

    The OICCI recommended that levy of FED on locally manufactured vehicles should be withdrawn by deleting the Serial No. 55B of Table I of First Schedule to the Federal Excise Act, 2005.

    The OICCI also suggested changes in advance income tax collected on various engine capacity.

    Currently, as per table under Division VII of Part IV of First Schedule, following advance tax under section 231 B is collected by manufacturers on the following categories of vehicles:

    Engine CapacityTax
    1001CC to 1300CCRs25,000
    1301CC to 1600CCRs50,000

    The OICCI said that presently most of the locally manufactured sedans passenger cars fall slightly above the 1300CC categories which includes Honda City (1339CC) etc. This slightly higher engine capacity size results in these vehicles falling in higher tax bracket making it more expensive with higher upfront cost to customers.

    The OICCI recommended that amendment should be made in the categories of vehicles mentioned in Division VII of Part IV of First Schedule as follows:

    Engine CapacityTax
    1001CC to 1350CCRs25,000
    1351CC to 1600CCRs50,000

    The OICCI highlighted levy of additional customs duty (ACD). It said that ACD was levied through SRO 1178(I)/2015 on various items, including raw materials at one percent which was enhanced to two percent through SRO 630(I)/2018. Through SRO 670(I)/2019, levy of ACD was further enhanced and slab wise ACD was introduced as follows:

    Tariff SlabAdditional Customs Duty
    Tariff Slab of 0%, 3% and 11%2%
    Tariff slab of 16%4%
    20% and higher7%

    The OICCI proposed to exempt imports under SRO 655(I)/2006 & SRO 656(I)/2006 from ACD.

  • One month free coverage to motor insurance policy holders

    One month free coverage to motor insurance policy holders

    ISLAMABAD: Securities and Exchange Companies of Pakistan (SECP) on Wednesday directed insurance companies to allow one month free coverage to motor insurance policy holders.

    The regulator in a press release said that in light of the outbreak of COVID-19 (Coronavirus) it has been advised non-life insurance companies to grant one month free of cost extension in insurance coverage to all motor insurance policyholders.

    The ongoing lockdown situation across the country has resulted in a significant decline in traffic density. With intercity public transport almost at a significant halt and limited within the city commute, it can be inferred that the policyholder claims in relation to motor insurance policies, would also have significantly declined.

    Taking into account the decline and/or the anticipated low claim ratio in motor business due to lockdown, insurance companies have been encouraged to take steps to facilitate and pass on the benefit of low claim ratio to motor insurance policyholders.

    As the fight against COVID-19 pandemic continues, it becomes imperative that insurance industry show its commitment to serve its policyholders by providing maximum relief and facilitation in all operational aspects. SECP believes that such good gestures in these difficult times will further increase policyholder’s confidence in the insurance sector.

  • Import of old, used cars plunges by 69 percent in nine months

    Import of old, used cars plunges by 69 percent in nine months

    KARACHI: The import of used and old cars witnessed sharp decline of 69 percent during first nine months (July-March) of current fiscal year due to imposition of condition regarding payment of duty and taxes through foreign exchange.

    The import of used and old cars in Completely Built Unit (CBU) condition declined by 69 percent to $64.8 million during July – March 2019/2020 as compared with $209.03 million in the corresponding period of the last year, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.

    The commercial import of used or old cars is prohibited under prevailing laws of the country. However, in order to facilitate expatriate Pakistanis the government allows incentives to bring cars into the country.

    The Federal Board of Revenue (FBR) allowed Pakistani nationals residing abroad including dual nationals, can import old and used vehicles into Pakistan under these schemes, included: Personal Baggage; Gift Scheme; and Transfer of Residence.

    The cars not older than three years and other vehicles not older than five years can be imported under these schemes.

    In the past these schemes were misused and bulk of imported cars brought into the country.

    However, the ministry of commerce in February 2019 amended Import Policy Order, 2016 and made it mandatory for clearance of cars through foreign exchange, which should be certified by banks.

    Since then the clearance of the cars has come to a standstill. Customs authorities said that a large number of imported cars were at the port but importer had failed to make payment as per procedure prescribed by the ministry of commerce.

    However, in November 2019 a meeting of Economic Coordination Committee (ECC) decided to allow payment for duty and taxes for customs clearance of imported cars through local resources with condition that if foreign exchange becomes short due to currency fluctuations or change in duty and tax rates.

    The overall import of CBU vehicles during first nine months of current fiscal year fell 59 percent. The import of heavy vehicles including buses and trucks has declined by 39.32 percent. While import of CBU motorcycles fell by 74 percent.

    On the other hand the import of cars as Completely Knocked Down (CKD) condition also fell by 43 percent to $343.42 million during July – March 2019 as compared with $611.38 million in the same period of the last fiscal year.

    Massive depreciation in the local currency during past couple of years had increased the cost of local car manufacturers. Further, the rates of locally assembled cars for end consumers also jumped up sharply.

    These factors have reduced the productions of locally manufactured cars and subsequently reduced the import of cars in CKD condition.

    The overall import of vehicles in CKD fell by 42.16 percent to $545 million during first nine months of 2019/2020 as compared with $942 million in the corresponding period of the last fiscal year.

  • Vehicle imports fall 10-year low on regulatory restrictions: State Bank

    Vehicle imports fall 10-year low on regulatory restrictions: State Bank

    KARACHI: The State Bank of Pakistan (SBP) has said that the regulatory restrictions on vehicle imports under the gift and baggage schemes continued to dent Completely Built Unit (CBU) imports.

    (more…)
  • Car sales plunge by 70 percent on coronavirus lockdown

    Car sales plunge by 70 percent on coronavirus lockdown

    KARACHI: The sales of locally assembled cars have plunged by 70 percent year on year (YoY) in March 2020.

    According to analysts at Topline Securities, the car sales (as reported by Pakistan Automobile Manufacturers Association) have plunged by 70 percent YoY and 43 percent MoM in March 2020 amidst the lockdown in the country due to the outbreak of COVID-19.

    The lockdown in the country started on Mar 23, 2020.

    Pak Suzuki Motor Company (PSMC) recorded its lowest monthly sales since March 2009 with volumes declining by 81 percent YoY and 50 percent MoM.

    Indus Motor (INDU) and Honda Car (HCAR) did not fare any better with 50 percent YoY/43 percent MoM and 59 percent YoY/27 percent MoM decline in volumes, respectively.

    The abysmally low sales because of COVID-19 outbreak have added to the sector’s already weak sales, resulting in overall auto sales registering a decline of 47 percent YoY in 9MFY20.

    The sales by Atlas Honda (ATLH) of motorcycles decreased by 24 percent YoY and 24 percent MoM to 69k units, which is the lowest monthly sale for ATLH since Jul-2016.

    The tractor sales recorded a 49 percent YoY decline, however fell by only 7 percent MoM.

    Millat Tractors (MTL) reported an increase of 2 percent MoM in its sales, while Al Ghazi Tractors (AGTL) sales declined by 22 percent MoM.

    The analysts expect tractors sales to be relatively less affected because of COVID-19 outbreak, as the focus of the government has been to keep agriculture related activities up and running.