Auto industry demands urgent govt support

Import of an average of 3,000 used cars per month is currently pushing growth of local industry into negative

LAHORE:

The local auto industry has urged the new government to promptly implement measures to support the sector and restore investor confidence in Pakistan.

“Currently, as many as 13 local brands are collectively producing over 40 models with a total capacity of 500,000 units per annum,” stated Abdul Rehman Aizaz, Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM).

However, he noted, the significant increase in the imports of used cars is posing serious challenges to the sustainability of the local auto industry, which has invested approximately $2.5 billion and contributed around Rs400 billion in taxes in FY2022 alone.

He lamented that this surge in used car imports continues to undermine the scale and potential of the local auto industry.

“In FY2022, the local auto industry accounted for approximately Rs250 billion in local purchase value and generated about 2.5 million direct and indirect jobs within the country,” he added. “The import of an average of 3,000 used cars per month is currently pushing the growth of the local industry into negative territory (approximately 40%),” Aizaz explained.

He further warned that this substantial influx of used cars in the country will eventually lead local businesses to closure, resulting in unemployment and economic losses (in terms of taxes). “It also impacts the country’s foreign reserves (economic loss of dollars), leading to a depreciation of the PKR value,” he mentioned.

It is worth mentioning that in the last nine months of the financial year 2023-24, a total of 27,852 units were imported, compared to 3,924 units imported during the same period in FY2022-23, marking a 610% increase.

According to data, the imports comprised 8,626 units in the Economy Segment, 6,491 units in the Small Low Segment, 5,864 SUVs, and 5,563 units from the economy pick-ups and MiniVans category. In the Other Vehicle categories, 1,308 units in the segments of Small High, Luxury, Buses, Trucks, and 1-Ton pickups were imported in the last nine months of the current financial year so far.

Published in The Express Tribune, April 23^rd, 2024.

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