Age limit for import of used cars increased

Decision not to apply to imported cars awaiting clearance.

ISLAMABAD: The government has enhanced the age limit for import of used cars from three to five years under special schemes in an attempt to break the monopoly of local car manufacturers.

According to a notification issued on Thursday, used cars up to five years of age can now be imported under the personal baggage, gift and transfer of residence schemes.

At present, the import of used vehicles is permitted only under special regimes.

The decision will take effect immediately, said the commerce ministry spokesperson.

He clarified that used cars already imported but not yet cleared by the customs department will not be entitled to the age relaxation.

“The decision is in favour of the public and will break the monopoly of local manufacturers,” said Shahzad Malik, president of the Lahore Chamber of Commerce and Industry’s finance and taxation committee.

He believes the decision will not have a negative impact on the domestic used car market but will help in lowering the rates of new vehicles.

The Competition Commission of Pakistan (CCP), in its automobile sector study, has highlighted the anti-consumer practices of the car manufacturing industry, where local assemblers have constantly been increasing prices over the years and the government seems to have assumed the role of a silent spectator.

The age relaxation recommendation was part of this year’s proposed trade policy, which was supposed to be announced in July.

However, the policy is yet to see the light of day and perhaps for the first time in its history, the country stands without formal annual export and import targets.

As per existing rules, in order to be eligible for importing a used car under the personal baggage scheme, a minimum stay abroad of six months within the last seven months is required.

In order to gift a vehicle to relatives, the requirement is at least two years of stay abroad during the preceding three years. Moreover, a vehicle may be gifted only to a family member residing in Pakistan.

Under the special regime, taxes are levied on the basis of engine capacity, irrespective of the vehicle’s value and optional/additional accessories.

Published in The Express Tribune, December 10^th, 2010.