Proposition to cover imported cars under already prevalent anti-premium rule

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The federal government had decided to impose an additional withholding tax (WHT) on locally-assembled cars, effectively increasing their prices up to Rs. 200,000 per unit, as had been reported by Business Recorder on December 11, 2020.

The move to introduce the anti-premium rule was in the wake of ever-increasing on-money on taking delivery of brand-new cars. Unnecessary long booking and delivery times for new vehicles, from factory to the customer, results in customers opting to take instant delivery of their purchased vehicle. In this regard, customers are then prompted to pay exorbitant amounts of premium known as “On money” as a means of exploiting customers in instant need of a vehicle. Introduction of anti-premium rule has acted as a deterrent for the dealers to charge excessive amounts of premium on delivery of vehicles.

Recently, an automobile company has called on the government for anti-premium rule to also apply to imported vehicles by barring the resale of such vehicles within 90 days of their original invoice. This move will act to discourage the practice of On-money on the delivery of imported vehicles also.

On a visit to Sundar Industrial Estate on Friday, the Chief Executive Officer of Indus Motor Company stated to a group of journalists “The apparent reason to introduce this amendment is to discourage on-money [premium] practice in the market. The step is very encouraging not only to existing players but to new entrants also. But this policy should also be applied to imported vehicles as well,”.

He also added that the production capacity of automobiles industry has now increased from 275,000 units to 500,000 units and at the same time the production variety is also growing as more and more people are choosing to cash in Automotive Development Policy (2016-2021) which comes to an end on June 30th, 2021. The new ADP will come into force from the very next day i.e. July 1st, 2021.

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