Auto manufacturers express reservations on import of used cars

ISLAMABAD: While importers of used cars in the country are reportedly lobbying for relaxation in import policy, local vehicle manufacturers and assemblers have expressed serious concerns regarding the proposed relaxation.

In a letter sent to Minister of Industries and Production Hammad Azhar, Pakistan Automotive Manufacturers Association (PAMA) has expressed concerns regarding news that the government is considering relaxing import policy for used cars arguing that the move will damage confidence of new investors and harm the existing auto industry.

PAMA which represents all major OEMs had also earlier written a similar letter to the Prime Minister Imran Khan on June 3.

According to PAMA, with more capacity being added with the entrance of Kia, Hyundai and Datsun the supply from the local auto industry will soon overtake the local demand, rendering all imports unwanted, costly and contrary to the interests of the country. 

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The letter sent to the Ministry of Industries alleged that used car dealers were abusing the policy meant for overseas Pakistanis and illegally importing used cars and vehicles causing massive flight of foreign exchange through illegal channels of hundi and hawala. 

According to reports, imported used cars have a substantial 30% share of the market. As a result, the chapter five of the Automotive Development Policy (2016-2021) was devoted to regulate the import of used vehicles in the country. 

It was in response to this policy that many new entrants responded positively and made huge investments in the country’s automotive sector. 

Referring to the decision of the government to discourage the import of used cars made in January 2019, the association claimed that it was the right policy step as it stopped pilferage of foreign exchange while providing relief to the industry and further confidence to the new investors. 

Earlier, the government through the Ministry of Commerce had directed all the importers to show remittance proof through a bank encashment certificate.

According to PAMA the misuse of the policy related to import of used vehicles loss of foreign exchange of almost $2 billion every year, evasion of General Sales Tax (GST) and Value Added Tax (VAT) by importers, loss of technology transfer to the country.

In comparison, local manufacturing of cars leads to the development of the local industry that in turn creates jobs for the local population. 

 

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Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]

28 COMMENTS

  1. There is no difference between the both parties i.e, local and imported vehicles. Toyota , Honda and Suzuki are supposed to manufacture 100% parts locally but ironically they are involved in import of bulk portion of parts causing drain on exchequer in terms of dollars. There are doing same, at least imported cars are of class standard having all basic safeties which is void in Toyota, Honda and Suzuki. Pathetic materials used in local cars

  2. Locally assembled cars use majority imported parts during assembling and again imported parts for regular maintenance/servicing. This makes it add a significant amount to inport bill leading to balance of payment issues and import/export deficits. If both local assembly and CBU import incur similar dents to import bill, CBU import under commercial import head with proper funds transfer scrutiny must be allowed.

    It is in the interest of consumers to have choice and competitive pricing compared to local assemblers who have looted the consumers and still fleecing them by nearly doubled the prices of their vehicles without adding ANY significant feature or improvement.

    After introduction of tariff based system which makes the localization scheme null and void, the assemblers must not be allowed to blackmail consumers and the government through loss of paltry assembling jobs. The assemblers exploit the local parts manufacturers on cost, orders and other issues as said by their own body/association. This is a disservice to both customers and parts vendors.

  3. Local cars are garbage… Govt please allow used cars upto 3 years old with reduced duties for pakistani consumer benefit.

  4. Nobody like local cars , local car with substandard material and no safety features .
    Consumer are forced to pay millions for these rubish things

    • Do you really call it “CARS” manufactured locally?, Government should stop such manufacturing immediately.

  5. Yeah old used refurbished cars are giving a tough competition to the local car manufacturers they should consider making quality cars within the country why is everyone in our country more intersted in stopping others to hide their own incompetence let it be cars or politics or media

  6. Why these blue eyes babies are being protected at the cost of users providing garbage at the highest cost with least quality. Why they’re not forced to follow, provide and
    compete international standards

  7. Local cars are piece of shit.there is no comparison of old refurbished cars and that made here locally.the old refurb cars have more comfort ,facilities and reliability.while the new cars assembled here in pakistan,lack common safety measures,too much expensive,no quality and look too much old after using a couple of years.i think pakistan needs to ban auto business here.we do not need such looter companies who are selling the cars ,which should have price not more than 10 lak for 40 to 45 lak.

  8. Local cars manufacturers could never give the consumers, value for money… hence, either they should either stop assembling 3rd class cars or face the destiny by imported cars…!!

  9. Please anyone reading do NOT PURCHASE a locally made car in Pakistan. They are complete waste of money. Rather, get a car
    Imported it is worth it by far as far as safety , reliability, comfortability and longevity is concerned.

  10. Enough is enough. Government should allow the import of vehicles atleast in restricted numbers to control the price hikes by local manufacturers. What good are they a part from reaping profits and charging unrealistically high.
    They were granted protection to attain self sufficiency but they are still just doing the assembly part with major input as a import.

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