India has an edge with mass production
New cars in Pakistan have become expensive. Not a single one is available for under Rs1 million.
Engineer Asim Ayaz of the Engineering Development Board, which regulates the auto sector in Pakistan, explains why this is so. India has huge demand for small cars that makes local production of car parts cheaper due to economies of scale.
Taxes and duties in India are also lower than in Pakistan. The taxes and duties in Pakistan are almost 40% of the total price of a car. But in India, taxes are below 20% (it varies from state to state). The price of bigger cars such as the Civic and Corolla are comparable with India.
The government’s ongoing Auto Development Policy (ADP2016-21) has given a push to healthy competition. Several car companies such as Kia, Hyundai and Changan have entered the Pakistan market. Suzuki makes lower-end cars worldwide while Toyota and Honda compete in the Sedan. This goes against the impression that the three Japanese companies, the Big Three, have colluded and operate as a cartel.