The automobile manufacturers of the country suggested the government to levy transfer tax in order to discourage premiums that have been a major source of concern for the automobile industry since a long time.
Indus Motor Company (IMC) Chief Executive Officer Pervez Ghias, while talking to Pakistan Today said that they have asked the government to consider imposing a transfer tax for the mentioned reason, adding that premiums are hurting the industry. He informed that IMC fines their dealers if they are found to be involved in taking premium, which go up to Rs0.5 million and has many times suspended them for three months. However, it was difficult to curb the premium menace completely because customers in Pakistan are willing to pay it.
“Consequently, one possible solution is to levy a transfer tax because any other strategy would not work by dint of the dynamics of Pakistan’s automobile market,” he said. One of the chief issues is that a dealer has his own customers. This puts the dealer in a position to easily hold around 20 thousand cars for a plausible amount of time to disturb the supply dynamics of the market. This is why we always request our customers to await the delivery of their cars from our side and not pay any premium to the dealer, he added
He noted that IMC tries its best to not book orders for more than one car against one National Identity Card, but people usually tend to order many cars using the CNICs of their relatives, resulting in supply and demand issues. It is noteworthy that the premium or discount issue comes before the supply problem. Ghias said that the motorisation index shows a very low per capita car ratio for Pakistan.
It is equal to only 13 cars per thousand people. Although, other Asian countries such as China and India also have more or less the same ratio, their growth in this regard is quite fast. And if we look at Iran and Sri Lanka, they have a ratio of 19 cars per thousand people, he informed. To a question, he responded that a plausible decrease in the trend of car leasing has been witnessed due to the non-availability of finance and increasing interest rates, and now banks have also changed their focus and have started looking for the small-high segment of the automobile industry.
He said the government should not focus on boosting the automobile sector; instead it should devise better and viable policies, which in turn will result in an automatic automobile boom because it is the framework that provides opportunities for effective growth. He further informed that the automobile industry is very unique in its structure as thousands of parts are arranged on time, based on the choice of the customers and this shapes the very outlook of the whole automobile system in which every thing has to be balanced out.
