In an effort to support local vehicle assemblers, the government has eliminated customs duty on hybrid cars and luxury electric vehicles (EVs). This decision has sparked controversy among used car importers who believe it will benefit assemblers more than consumers.
Local hybrid vehicle assemblers are likely pleased with the outcome of their recent meeting with Prime Minister Shahbaz Sharif, leading to the removal of import duty exemptions. This change aims to level the playing field between hybrid and fossil fuel vehicles to favor local production.
The shift in tax policy from engine capacity to car value may impact pricing strategies, potentially driving demand for locally manufactured hybrid vehicles. Additionally, the removal of tax exemptions on luxury EV imports could steer affluent buyers towards domestic options.
Despite government support for local manufacturers to increase part localization, concerns remain over the importation of buses instead of promoting local production. The budget for FY25 lacks incentives for small car buyers and measures to boost small and medium enterprises.
Auto industry stakeholders are divided on the budgetary measures, with some applauding the support for local production while others express concerns over missed opportunities for sector growth.
Published in Dawn, June 13th, 2024
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