Late Car Delivery in Pakistan: Lucky, Hyundai Nishat pay Rs 139m penalty
Ibn-e-Ameer
Lucky Motors and Hyundai Nishat take a lead in the late delivery of 3403 new cars cases and paid Rs 139 million interest as penalty to the customers that were forced to pay ‘on-money. The customers faced delays in delivery of new cars in Pakistan.
The previous government of PML-N had offered incentives for new entrants in auto policy 2016.M/S Lucky Motors and Hyundai Nishat had made footprint in Pakistan as a result of that policy.
The objective of new auto policy was to encourage competition and discourage ‘on money’ on delivery of new cars in Pakistan. However, that practice still continues.
Even, entry of new car players did make any difference and customers were still paying ‘on money’ on delivery of new cars.
The government of PTI had also approved new auto policy 2021 to discourage ‘on money’ on speedy delivery of new cars.
M/S Lucky Corporation Motors Limited delayed delivery of new cars in 2805 cases out of total 3403 cases during July 1, 2021 onwards.
Due to delay in delivery of new cars, the auto makers had to pay Rs 142 million interest to the customers as a penalty on the late delivery of new cars.
Lucky Motors had to pay Rs 73 million interest as penalty due to late delivery of new cars to the customers.
Honda Atlas had paid Rs 1.7 million interest on late delivery of cars whereas Indus Motors paid Rs 0.6 million.
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Suzuki Motors paid Rs 85024, Master Changan Motors Rs 0.195 million and Hyundai Nishat Motors Rs 66.5 million
While briefing cabinet, ministry of industries and production had informed this.
It said that penalty will address -“On- Money” Problem through Removing Demand Supply Gap.
Cabinet had approved Heavy Penalty/charge on the late delivery (more than 60 days KIBOR-3).
The government had removed limit of 3 months on delivery of new cars in Pakistan to impose extra tax. If booked by one person and registered on the name of another person at any time, government will levy extra tax.
Industries ministry said that it had held extensive stakeholder consultations with OEMs & Part manufacturers to identify constraints.
The government had reduced ACD from 7% to 2% along with withdrawal of court cases by the OEMS & payment of longstanding arrears.
In order to increase demand to utilize newly installed capacities, the government reduced FED on all cars.
In order to make small cars affordable to the middle class, it also reduced sales tax on small cars.
The banks came forward to finance this high demand activity. Subsequently, they increased financing on auto sector from 240B to 338B (44%) till October 2021 (year on year basis).
Production of cars in the first five months of current financial year touched an all-time high number of 111,435 as compared to 65,998 in the same period last year (69% increase).
Industries ministry said that general public had welcomed these changes in Policy. It will promote positive economic sentiment.
The competition in Car/LCV/SUV Market witnessed hike as variety for customers’ capacity increased to 439,500.
New Product Policy
It informed the cabinet that competition in small cars/ tractors/ motorcycle> 125cc is still less than desirable.
The government had created a window for entry of new players as well as for existing players for 3 years to produce new models of small cars (upto 1000cc).
It will offer duty structure of 15-30% as opposed to 10-25% offered in the previous policy.
