Pak Suzuki Motor Company has expressed concerns regarding the proposed increase in sales tax on small cars with engine capacities below 850cc, warning that such a measure could negatively affect consumers and the wider automotive sector.

In a meeting with the Special Assistant to the Prime Minister (SAPM) on Industries and Production, Haroon Akhtar Khan, Pak Suzuki's Managing Director, Hiroshi Kawamura, stated that the proposed increase in sales tax from 12.5% to 18% would impact market dynamics.

Kawamura noted that higher tax rates would lead to increased vehicle prices, reducing affordability for small, fuel-efficient vehicles that are typically purchased by lower- and middle-income consumers.

"The burden of increased taxation ultimately falls on the end user," Kawamura said. "Rising costs may discourage car ownership, limit industry growth, and reduce production volumes."

SAPM Haroon Akhtar, in response, cited Pakistan's ongoing International Monetary Fund (IMF) programme, which has constrained fiscal flexibility and limited the government's ability to continue tax exemptions for specific sectors.

He acknowledged that the current budget includes difficult measures but maintained that the government supports industrial development, including the automotive industry.

"The Prime Minister is aware of the automotive sector's role in employment and local manufacturing," Akhtar said. "Engagement with stakeholders is ongoing to address challenges and promote steady growth."

On the same day, Akhtar also met with Danial Malik, Chief Executive Officer of Master Changan Motors, who raised similar concerns. The discussion highlighted the need for a long-term policy approach to support the automotive industry's transition to New Energy Vehicles (NEVs), including electric vehicles.

Akhtar confirmed the government's plan to introduce a National Electric Vehicle Policy, stating that it aims to encourage investment, infrastructure development, and adoption of electric mobility technologies.

Pak Suzuki has called for a reconsideration of the proposed sales tax increase, citing its potential to affect consumer demand and slow progress in the small car segment.