Demand for used, imported car thrives amid rising prices

Affordable imported cars outpace struggling local auto industry despite rising duties

LAHORE:

Pakistan's used and imported car market continues to thrive, driven by high demand for affordable alternatives, a weak local automotive industry, and a surge in second-hand vehicle imports.

Analysts agree that this sector remains in steady demand, especially as inflation and economic instability push the prices of locally manufactured vehicles to unaffordable levels.

Estimates suggest that used cars now account for over 60% of total vehicle transactions in Pakistan.

New car sales have struggled in recent years due to supply chain disruptions, rising production costs, and an increasingly fragile economy.

In contrast, the used car sector has flourished, offering consumers affordable options with easier access. Many are now opting for pre-owned and imported vehicles to meet their transportation needs.

Mohammad Waseem, an auto industry analyst, explained that the used car industry is experiencing solid growth in 2024, driven by demand for budget-friendly vehicles.

"The middle class, a major part of the market, can no longer afford new cars due to skyrocketing prices. As a result, they are turning to pre-owned and imported vehicles," he said.

Despite economic challenges, the auto sector has shown resilience. One major factor is the strong demand for Japanese imported cars, which are seen as more reliable and affordable than local options.

These vehicles, often equipped with modern safety and technology features, are increasingly popular with Pakistan's growing urban population.

During the first half of 2024, the import of second-hand cars surged by nearly 20%, signalling a shift towards this segment.

Sher Jan, a used car importer, noted that despite higher duties on imported vehicles in the recent budget, consumer interest in this market remains high.

"The local industry is slowing down, but our business in imported cars has grown significantly. Customers want reliability and value, and Japanese cars offer that, even with the added duties and taxes," he said.

However, the government has imposed stricter regulations on car imports to manage foreign exchange reserves, which has affected the flow of vehicles into the country.

Khalid Mahmood, a Lahore-based auto expert, warned that the used and imported car market could face hurdles if the government further tightens import regulations.

"Local manufacturers are trying to compete by launching budget-friendly models, but they still can't match the quality and affordability of used imported cars," Mahmood said.

The future of this market depends on government policies. If restrictions on car imports persist, the used car sector may contract.

However, more favourable policies could lead to further growth, as these vehicles continue to meet a crucial need for budget-conscious consumers, he said.