Islamabad, June 18, 2025 – Pak Suzuki Motor Company has raised serious concerns regarding the proposed increase in sales tax on small cars under 850cc, warning that such a move could severely impact both consumers and the broader automotive sector.
In a high-level meeting with Special Assistant to the Prime Minister (SAPM) on Industries and Production, Haroon Akhtar Khan, Pak Suzuki Managing Director Hiroshi Kawamura cautioned that the increase in sales tax from 12.5% to 18% would be detrimental to market dynamics. Kawamura emphasized that higher tax rates inevitably translate into higher prices for consumers, thereby reducing affordability, especially for small, fuel-efficient vehicles that cater to the lower and middle-income segments.
“The burden of increased taxation always falls on the end user,” Kawamura remarked. “Rising costs may discourage car ownership, hinder industry expansion, and put downward pressure on production volumes.”
SAPM Haroon Akhtar, while acknowledging the challenges, explained that Pakistan’s ongoing IMF program has constrained fiscal space, making it difficult for the government to maintain tax exemptions for any sector. He reiterated that while the current budget does propose tough decisions, the government remains committed to supporting industrial development, including the automotive sector.
“The prime minister is fully aware of the auto industry’s significance to employment and local manufacturing,” Haroon stated. “Pak Suzuki and other manufacturers play a critical role in Pakistan’s economy, and we are engaging with all stakeholders to ensure sustainable growth.”
During the same day, Haroon Akhtar also met with Danial Malik, CEO of Master Changan Motors, who echoed similar concerns. Their discussion emphasized the need for a forward-looking policy framework to help Pakistan’s auto industry transition toward New Energy Vehicles (NEVs), particularly electric vehicles.
Haroon reaffirmed the government’s plan to launch a comprehensive National Electric Vehicle Policy soon, adding, “The prime minister envisions Pakistan becoming a competitive hub for auto manufacturing. Our upcoming EV policy will encourage investment, infrastructure, and eco-friendly mobility.”
Pak Suzuki, as a leading auto player in Pakistan, continues to advocate for pragmatic taxation and pro-growth policies that protect consumer interests while supporting domestic industry. The company has urged the government to reconsider the sales tax hike to prevent stagnation in the small car segment.