Car prices have dropped a lot recently in Pakistan. Kia lowered the price of Stonic by over Rs. 15 lacs, followed by Peugeot 2008 with a reduction of Rs. 4.5 lacs, and Suzuki Swift with a decrease of Rs. 7.1. This kind of price drop rarely happens in Pakistan, so why did it occur now? Let’s find out with economist Ali Khizer.
For reference, Stonic’s price is reduced by 24%, Swift’s by 13%, Yaris 1.3 CVT, and City CVT by 3%, respectively.
New GST & Car Prices
Ali Khizer noticed that prices have dropped significantly. Previously, cars were priced between Rs. 4.83 million and Rs. 6.28 million, but now they’re between Rs. 4.69 million and Rs. 4.77 million after the reduction.
There is a reason for the new prices of all four cars mentioned above to remain below Rs. 4 million without GST. But why? The answer is simple: the 25% GST on cars.
Ex-GST Prices
If you remember, back in March 2023, the government increased GST on 1400cc and above cars (including SUVs) to 25% from the previous 18%. “All these cars, except Stonic, remained unaffected as they are all under 1400cc and not SUVs. However, Stonic took the heat of the decision, and its price was increased.
Now, in March of 2024, exactly one year, the government changed the regulation, implementing 25% GST on all cars with ex-GST prices above Rs. 4 million. Seeing this, Toyota and Honda reduced their car rates, taking the prices of their 1.3 and 1.2 top variants below Rs. 4 million to ensure their brackets remain under Rs. 4 million to avoid the new tax.
Following this, Kia took a bold step and reduced the price of Stonic to enter this bracket of Rs. 4 million without GST, and now Suzuki has followed suit with the new price of Swift. So, all in all, the companies are trying to avoid the new GST slab, which somehow proved to be positive for the consumers.
