Govt urged to protect auto industry

PAMA’s Khan says import of used vehicles has increased by staggering 641% this year

GOHAR ALI KHAN March 26, 2024
The auto industry suffered a massive setback in 2022-23 due to import restrictions, skyrocketing inflation, and other macroeconomic challenges. photo: file


Secretary General of the Pakistan Automotive Manufacturers Association (PAMA), Abdul Waheed Khan has urged the government to support the local auto industry amid rising concerns over a significant increase in used car imports, which are negatively impacting the struggling automobile sector.

According to import data, the influx of used vehicles has soared to 25,098 units, marking a staggering 641% increase during the first eight months of the current fiscal year compared to around 3,386 units imported in the same period last year. The majority of these imported vehicles fall into categories such as SUVs, eco-pickups, minivans, and others. In February 2024 alone, 3,213 used vehicles were imported, compared to 396 units during the same period last year.

“The expiration of SROs 1571/22 and 1572/22 has resulted in the Regulatory Duty (RD) and Additional Customs Duty (ACD) previously imposed on used vehicles being lifted, placing locally-produced vehicles at a competitive disadvantage. Despite this, there has been no revision to the higher taxation imposed,” stated Khan in a statement on Monday. “Furthermore, SRO 577/2005, which prescribes duties and taxes on used vehicles, has not been amended in about ten years, resulting in lower duty calculations. This situation worsens when a 60% depreciation of duties and taxes is applied.”

Khan urged the government to implement measures to curb the illegal import of used cars, thereby supporting the local auto industry, which is currently facing multiple challenges. He stressed the importance of the local automobile industry in attracting foreign investment, promoting technology transfer, creating jobs, contributing significantly to tax revenue, and playing a crucial role in large-scale manufacturing, thereby contributing to the economic growth of the country.

Read Auto industry forced to slash prices

To sustain the growth of the local industry and achieve the objectives of the Automotive Industry Development and Export Plan (AIDEP) 2021-2026, Khan stressed the need for policy sustainability. The AIDEP aims to promote small cars, increase localisation, incentivise the introduction of new products in tractors and motorcycles, ensure consumer protection, promote new technologies such as Electric Vehicles (EVs) and hybrids, and target export markets.

Speaking to The Express Tribune, Murtaza Mandviwala, a leading auto expert, dealer, and author of ‘Steering The Pakistani Wheel’, said, “Until localisation is promoted in the country, auto prices will remain high. Enhancing road transportation is key to improving mobility, and increasing localisation is essential. It presents a straightforward approach for the government to levy taxes on autos, aimed at boosting revenue.”

Mandviwala suggested reducing import duties on auto parts, opening trade with India to access cheaper components, and stopping the misuse of used car imports to address the growing volume in Pakistan.

Published in The Express Tribune, March 26th, 2024.

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