Allowing used car imports under the special regime – a scheme that does not require custom duties payment – has resulted in a loss of Rs10 billion in six months, according to Pakistan Association of Automotive Parts & Accessories Manufacturers.
More than 35,000 used cars have arrived at the port and hit the roads in the past 12 months.
The automobile parts industry has lost an estimated Rs25 to 27 billion in sales, as local auto industry remained under pressure and sales were hindered by the arrival of used cars, said Chairman Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Nabeel Hashmi.
Hashmi, in a meeting on Friday to discuss repercussions of used cars in the country, said that local production of cars and LCV’s have registered a massive reduction of 22,000 to 25,000 units owing to the import of used cars.
However, data released by another automobile body contradicts this statement as car sales grew by 17% to 98,252 units during July 2011 to March 2012, according to the Pakistan Automotive Manufacturers Association.
“Giving customs department discretion to further reduce applicable duties up to 60% depreciation has literally allowed imports of used cars for free,” said Hashmi.
Now precious foreign exchange will have to be wasted on import of spare parts for these used vehicles, which will also cause a loss to the exchequer to the tune of $50 million only in one year, he estimated. “Hundreds of components such as rims, tyres, batteries, radiators, steering wheels, air conditioners and other parts, which are produced by local vendors, will now be imported,” he said. Vendors were directly providing jobs to almost 200,000 skilled workers along with over two million indirect workforce, who fear layoffs if imports of used vehicles continued in high numbers, Hashmi added.
Published in The Express Tribune, April 7th, 2012.