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Honda and Changan reduce car prices in Pakistan

Will used cars also become cheaper?

SAMAA | - Posted: Jul 10, 2021 | Last Updated: 3 months ago
SAMAA |
Posted: Jul 10, 2021 | Last Updated: 3 months ago

Honda Atlas and Master Changan have also announced a reduction in their car prices but the former hasn’t reduced the price of its top-selling City car. The reason is that the company was launching City’s new model and is yet to reveal its price.

Civic’s Turbo variant has been reduced by Rs135,000. The sedan’s new price is Rs4.56 million. The other two Civic variants price have been reduced by Rs115,000. Civic 1.8 and Civic 1.8 Oriel will now cost Rs3.61 million and Rs3.86 million, respectively.   

BRV’s price has been reduced by Rs105,000; its new price is Rs3.37 million.

Meanwhile, Changan Alsvin variants price have seen a price decrease of around Rs60,000. Alsvin’s top variant Lumiere is now priced at Rs2.59 million; two basic manual and automatic models are priced at Rs2.15 million and Rs2.4 million, respectively.

The minivan Kaarvan variants price has been reduced by Rs100,000. Karvaan Plus is now priced at Rs1.54 million and the basic model is priced at Rs1.4 million.  

Related: Looking to buy a car? Pakistan companies have reduced prices

Why have the prices been reduced?

The government decided to reduce the Federal Excise Duty on all vehicles even above 1,000cc by 2.5%. Sales tax has been reduced on vehicles below 1000cc from 17% to 12.5%.

Meanwhile, 7% additional customs duty has been removed on cars below 1000cc and reduced on cars above 1000cc to 2%.

A 2.5% FED was applied on cars below 1000cc; 5% was imposed on cars below 2000cc and above 1000cc; and 7.5% on cars above 2000cc. All these categories will now see a price decline of 2.5%.

This means 1000cc and below cars will have no FED. Cars above 1000cc but below 2000cc will have a FED of 2.5%, and cars above 2000cc will have a FED of 5%.

Initially, Finance Minister Shaukat Tarin had announced that the government has removed 2.5% FED on 850cc cars. Sales tax, too, was reduced from 17% to 12.5%.

The decision was taken to reduce the prices of cars in the entry-level segment. This segment is assumed to entertain middle and lower-income groups. 

Later, it was announced that the duty and tax reductions were extended to 1000cc cars. Now finally, FED has been reduced on all cars.

Additional customs duty has been removed on cars below 1000cc and reduced to 2% to cars above 1000cc. ACD was 7% on all cars.    

What about used cars?

A car dealer at Khalid bin Walid Road Shah, Mohammad Shah, said that the used cars’ value will also go down but it will not reflect precisely the change that have come in cars prices. “The used cars value is already depreciated,” he said.

“If a new car’s price has decreased by Rs100,000. The same car of an only model will see a decrease of Rs50,000 on average. But it will also depend on the car’s year of make too,” he said.

Why is there a bigger change in prices of old companies?

The Additional Customs Duty (ACD) put by the government was contested by the new entrants, said a company official of a new car company.

“The new car companies that came after Auto Development Policy 2016-21 contested the ACD because government promised it will not change anything in the industry during the period.

So, when it imposed ACD, we contested it and were not paying it. So, removing ACD doesn’t have any implications on new car companies,” the source explained.

Will the price be reduced for people who booked cars before July?

The people who have booked cars above 1000cc before July will benefit from the reduction in FED, according to a Toyota car dealer.

But according to a Suzuki car dealer, the people will get the benefit of FED reduction but they will not get the benefit of Sales Tax reduction since ST gets paid to FBR when a car is booked.

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