Government to introduce new auto financing program as part of upcoming auto policy

ISLAMABAD: The government will introduce a new car finance system with a 5 to 6 percent lower interest rate to facilitate customers who cannot buy a car after the steep price increases in recent years.

According to an official from the Ministry of Industries and Production, the government wants to facilitate small cars from 850cc to 1000cc to customers at reduced interest rates to make it as easy as possible for buyers. However, the financing facility would also be extended to cars over 1000 cc. “The proposed rate for small cars would be around 5%, while 6% is suggested for cars over 1,000 cc,” the official said.

“The installation could boost sales in the automotive industry, which would ultimately create business and employment opportunities,” he said, adding that the installation was currently under discussion. with stakeholders.

At a recent meeting on the proposed new car policy, he was informed by the Federal Minister of Industry and Production, Makhdum Khusro Bakhtyar, that the aim of introducing a new policy is to supply small affordable cars, i.e. 850 cc-1000 cc, promote localization in locally assembled cars, produce exportable surplus of 2-3 wheel auto parts and increase competition in local market so Pakistanis can enjoy better technology at affordable prices.

The article continues after this announcement

In addition to the financing facility, the government also announced a reduction in the general sales tax (GST) on locally assembled cars up to 850cc to 12.5%, from 17% in the 2021-22 budget, followed by ‘an exemption from federal excise duties (FED) and value. – additional tax to relieve buyers of small cars. Small local car-producing companies, including Pak Suzuki Motor Company Ltd (PSMCL), will benefit from the concession.

New policy for hybrid cars

According to sources, auto industry players have also agreed to provide incentives for hybrid cars in the upcoming policy (2021-26), similar to what has been given to electric cars. Electric vehicle (EV) parts in hybrids are likely to benefit from incentives similar to those stipulated in the EV policy.

“The tariff easing offered for electric vehicle parts is also being offered to CKD hybrid cars as part of the new auto policy,” said an official from the Engineering Development Board (EDB).

Previously, as part of the electric vehicle policy, a 1% sales tax for locally manufactured electric vehicles up to 50kwh and light commercial vehicles up to 150kwh was introduced. In addition, import duties on loading equipment were capped at 1 per cent.

Speaking to this scribe, the additional secretary of the Ministry of Industry and Production, Hamid Atique, said the ministry is trying to cover the fiscal part of the next car policy which is to be included in the FY22 budget. “The remaining part of the policy would be finalized within the next month,” he said.

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