LAHORE - The taxes and duties constitute more than 33 per cent of the retail price of the locally manufactured vehicles and if government’s huge levies are waived off the car prices could be slashed by at least one third.
The 33% taxes include custom duty, sales tax, withholding tax, corporate taxes, excise, registration, etc. Only the IMC has contributed over Rs 224 billion towards national exchequer besides saving precious foreign exchange through localization since its establishment.
‘For example, the imported content is 24% in Corolla that includes imported parts from different countries called CKD. On the other hand, the local content in this car is around 34 per cent, including locally-purchased parts from Pakistan part makers,’ said chairman IMC Ali Habib while talking to a group of journalists.
Today, he added, IMC with production capacity of 230 cars per day is one of the biggest manufacturing concerns of Pakistan with substantial forward and backward linkages, duly recognized by the major stakeholders. ‘Besides, 1,400 parts are supplied every day (100 plus truck loads supply) and there are 1,000 plus transactions,’ he added.
And all such achievements of IMC are being nullified through the support of government to illegal used car imports. ‘The used car imports are also proving damaging to allied auto industries and have become threat to huge employment base for vendors and other small businesses,’ he said.
On the other hand, the IMC progressed quite much in localization that has helped allied industries and created thousands of employment opportunities. ‘The company is procuring local parts worth over 110 million every working day. The localization model was launched at Rs 530,000 (US$ 19,630) in 1993 when net off GST the car price was $17,069.
This heavy local purchases worth of 110 million rupees are substituting imports and saving foreign exchange for Pakistan, said the official, adding that IMC has recently introduced 11th Generation Corolla which is the most sophisticated and technology laden vehicle in its class being manufactured in only 13 countries, including Pakistan.
‘The 11th Generation Corolla was introduced at a price of $15,920. The recognition for quality of IMC’s cars can be easily seen by this example when 100 plus Corolla Altis were exported to Sri Lanka in 2013-14,’ said the official, adding that over 25 years IMC has introduced numerous CKD and CBU vehicles in Pakistan (Corolla, Coure, Hilux, Fortuner) in view of the local market needs.
But, he added, the used car imports are not beneficial to both the consumer and the national economy. ‘The prices of locally made cars can be further reduced if the government lowers it tax share.
The government is currently charging half the actual duties on used cars, which is another injustice to the local auto industry,’ he added.