Honda Atlas Cars announced a price reduction of up to Rs140,000 on two variants of its City model, following a similar move by Indus Motor Company, which also decreased the prices of its Toyota Yaris cars. The adjusted rates will take effect from March 15.
The new price for the City MT1.2L is now Rs4.649 million after a reduction of Rs50,000. Additionally, the price of the City CVT 1.2L has been reduced by Rs140,000, bringing its new price to Rs4.689 million.
In response to the recent hike in the sales tax on automobiles priced above Rs4 million, both Toyota and Honda have announced significant price reductions. Toyota’s Yaris sedan lineup saw decreases ranging from Rs73,000 to Rs133,000, while Honda Atlas Cars reduced prices of its City models by up to Rs140,000.
Muhammad Abrar Polani, a research analyst at brokerage house Arif Habib Limited (AHL), noted that Honda’s decision to lower the prices of its City variants mirrors Toyota’s strategy. Both companies aim to mitigate the impact of the increased sales tax on cars with engine sizes exceeding 1400cc and those priced above Rs4 million.
The government’s decision to raise the sales tax on vehicles with engine sizes of 1400cc and above, as well as those invoiced above Rs4 million, from 18% to 25%, has significantly affected the auto industry. Initially targeting cars with engine sizes of 1400cc and above, the tax increase eventually encompassed some SUVs below 1400cc, leading to the inclusion of a Rs4 million price cap.
This cap resulted in certain Toyota, Honda, and Suzuki models falling under the heightened sales tax regime. Pakistan’s auto sector has been grappling with challenges such as high-interest rates and increased production costs, resulting in elevated car prices and a downturn in sales.
During the first eight months of fiscal year 2023-24, total car sales plummeted to 59,699 units, marking a 41% decline compared to the same period last year, when sales reached 101,426 units. The preceding fiscal year, 2022-23, also witnessed a significant sales slump, with figures dropping 56% to just 126,879 units.
