The Suzuki Alto, one of Pakistan’s top-selling compact vehicles, experienced a major drop in sales last month. According to data from the Pakistan Automotive Manufacturers Association (PAMA), sales plummeted by 75%, falling from 9,497 units in June to just 2,327 in July.
The steep decline followed recent government changes to taxation. The General Sales Tax (GST) on cars up to 850cc was raised from 12.5% to 18%. Additionally, the government introduced a new NEV levy, applying 1% to vehicles up to 1300cc, 2% for 1301cc to 1800cc, and 3% for larger vehicles. The Alto, although below 850cc, was still impacted by these fiscal adjustments.
Reacting to the tax changes, Pakistan Suzuki Motors Company (PSMC) raised the price of the Alto to Rs. 3,326,450. The higher price point pushed the car out of reach for many budget-conscious buyers, particularly first-time car owners, a segment that traditionally makes up a significant portion of Alto’s customer base.
In an attempt to shield buyers from the tax hike, PSMC adopted an early invoicing approach in June, processing orders for July and August in advance. While this strategy boosted June’s numbers, it contributed to a significant decline in subsequent months.