Have you ever scrolled through car websites from India, Malaysia, or Thailand and felt a sharp sting of disbelief? A brand new, feature-packed sedan that costs the equivalent of PKR 3 million there is somehow priced at over PKR 5 million here. A study by the Pakistan Institute of Development Economics (PIDE) found that between 2015 and 2020, consumers paid a staggering PKR 150-170 billion in "on-money" or premiums alone. This is over and above the already inflated prices, making car ownership a distant dream for many.

So, what's really going on? Let's peel back the layers on this complex and costly issue.

The Iron Grip of the ‘Big Three’

For decades, the Pakistani car landscape has been dominated by an oligopoly: Suzuki, Toyota, and Honda. Often referred to as the ‘Big Three,’ these companies have held a commanding market share. This lack of genuine competition is the foundational reason for high prices.

In Pakistan’s auto industry, true competition is sorely lacking. With Suzuki Pakistan dominating the market, there's been little pressure on manufacturers to innovate or lower prices. A striking example is the Suzuki Mehran, produced by Suzuki Pakistan, which retained essentially the same design and features for 30 years, largely because no strong rival emerged. Even recent new entrants haven’t fundamentally disrupted the market. The result is a seller’s market, where buyers have minimal choice and little bargaining power while prices remain elevated.

Government Policies: A Double-Edged Sword

While it’s easy to point fingers at the car manufacturers, government policies have played a massive role in inflating car prices in Pakistan. The government levies a complex web of taxes on locally assembled and imported cars. These include:

• Customs Duty: A tax on importing car parts (CKD - Completely Knocked Down kits) used for local assembly.

• Sales Tax: A standard tax applied at the point of sale.

• Federal Excise Duty (FED): An additional tax that often fluctuates depending on the government's fiscal needs.

When added together, these taxes constitute a significant chunk of the final showroom price. While these taxes generate revenue for the government, they place a heavy burden on the end consumer.

Furthermore, the constant devaluation of the Pakistani Rupee against the US Dollar is a critical factor. Since many crucial components are still imported, any weakness in the Rupee directly translates to higher import costs for assemblers. This cost is, without fail, passed on to the customer in the form of price hikes, which seem to occur every few months.

The "On-Money" Black Market

Perhaps the most uniquely Pakistani problem is the phenomenon of "on-money" or "premium." You decide to buy a new car, you go to the dealership, and you're told there's a waiting period of several months. If you want the car immediately, you have to pay an extra amount, the "on-money", to an investor or dealer who booked the car earlier.

This artificial shortage, often blamed on production planning but widely seen as a tool to create demand, fosters a black market that further inflates the car's price. You end up paying hundreds of thousands of rupees over the official sticker price just to get your hands on the vehicle you've already paid for. This practice makes the official price tag irrelevant and exploits the customer's needs.

The Myth of Localization

For years, we've been told that promoting local assembly will lead to "localization", manufacturing car parts in Pakistan. The goal of every auto policy has been to encourage companies to move from simply assembling imported kits to producing components like engines, transmissions, and electronics locally.

The reality? The progress has been painfully slow. While some parts like seats, tires, and plastic trims are made locally, the high-tech, high-value components are still overwhelmingly imported. According to the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), the localization levels in the passenger car segment are still far from satisfactory, especially concerning engine and transmission parts. This heavy reliance on imports keeps the industry vulnerable to global supply chain disruptions and currency fluctuations. This ensures that the dream of an affordable, truly "Made in Pakistan" car remains distant.

Conclusion

The high price of cars in Pakistan results from a perfect storm: limited competition, hefty taxes, a volatile currency, and slow progress in local manufacturing. This environment has made owning a new car a major financial hurdle for the average person.

In such a challenging market, investing in the vehicle you already own is the smartest move. Proper maintenance preserves your car's value and ensures its reliability, saving you from the frustrations of the new car market. This is where a reliable source for parts and accessories becomes invaluable. For a comprehensive range of quality parts and accessories to keep your car in top condition, SehgalMotors.pk is your go-to destination. Refreshing your current ride is not just economical; it’s a powerful way to navigate a difficult market.