Toyota Indus Motor Company (IMC) has once again halted production, announcing non-production days (NPDs) from June 3 to June 8, 2023. The company, in an official notice to the Pakistan Stock Exchange (PSX), cited a shortage of inventory as the reason behind the temporary shutdown of its car assembly plant.
The automotive sector in Pakistan has been facing numerous challenges, and this recent production halt by IMC further adds to the industry’s distress. Reports indicate that the federal government is considering implementing Withholding Tax (WHT) on domestically produced automobiles based on the invoice price rather than engine capacity in the upcoming budget.
In response to this potential policy change, the Pakistan Automotive Manufacturers Association (PAMA) has expressed concerns over the negative consequences it could have on the already struggling auto industry. PAMA, in a letter addressed to the Chairman of the Federal Board of Revenue (FBR), has urged the board not to proceed with the proposed change, as it is likely to result in higher retail prices for locally-assembled cars. Additionally, PAMA has requested a reduction in the current engine-based WHT on vehicles.
Automakers in Pakistan fear that the ongoing operational challenges, coupled with the potential tax policy alteration, may push them towards an even more precarious situation and even threaten their viability. The government has yet to issue a formal response to the pleas for assistance from the auto sector.
The future of the automotive industry in Pakistan remains uncertain, with stakeholders eagerly awaiting a supportive response from the government to alleviate the current distress.