Global Chip Shortage Continues to Delay Car Deliveries in Pakistan

The global shortage of the semiconductor chip has been a matter of great concern for automakers as the worldwide supply chain and production of automobiles have taken a massive hit. The problem has caught up with the Pakistani automotive market, with several automakers announcing delivery delays.

The majority of carmakers in Pakistan have admitted that they are unable to deliver vehicles in time because of the shortage and a high number of advance bookings. Kia, Hyundai, Haval, and MG are among the companies that have publically announced the delays in their deliveries.

 

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The Pak Suzuki Motor Company (PSMC) and the Toyota Indus Motor Company (IMC) reportedly have delivery durations of between 15 days to four months while Honda Atlas Cars Limited (HACL) has a delivery duration of between seven to nine months. Reports suggest that the rest of the automakers also have delivery durations upwards of three months for their vehicles.

The government had mentioned in the latest automotive policy that the automakers that deliver vehicles after two months of the booking date will have to pay a penalty of three percent plus KIBOR. Since the policy was enacted in July, it is expected to be implemented this month.

Earlier this year, the government of Punjab and the Islamabad capital authorities had issued a decision to impose withholding tax (WHT) on car buyers. Accordingly, if a person purchases a vehicle in Punjab or Islamabad and sells it within three months of the purchase, he/she will have to pay a certain amount of WHT, otherwise, the authorities will seize the vehicle.


The tax has been imposed on vehicles on an engine-category basis. The owner will have to pay the following amounts in taxes:

  • Rs. 50,000 for vehicles with an engine displacement up to 1000cc
  • Rs. 100,000 for vehicles with an engine displacement up to 2000cc
  • Rs. 200,000 for vehicles with an engine displacement above 2000cc

These steps have been taken by the government to eradicate the ‘own money’ culture from the market but these are yet to be implemented.