'Used cars import to badly hurt local industry'

The policy of new and used cars import is a big threat for local industry as these are being imported by investors and car dealers instead of overseas Pakistanis. Pervez Ghayas, Chief Executive Officer, Indus Motor Company (IMC), stated this while briefing the media here on Thursday.
He said that local car-manufacturing industry is growing rapidly and is ready to establish a globally competitive automobile industry in the country by the year 2012 by increasing motorization level and enhancing automobile production to 500,000 units per year.
The increased capacity would enable export of automobiles and auto parts due to economies of scale and by significantly enhancing the industry's contribution to the economy, Ghayas added.
About the total production of local automobile industry, the IMC CEO said that manufacturing of 215,000 units by local industry is expected by the end of June against 179,000 units in the year 2004-05.
Ghayas said that the local manufacturers and vendors were making efforts to increase capacity to meet shortfall and added that the re-sellers, investors, roadside dealers are responsible for increase in delivery times for genuine buyers.
He said that the government has allowed the overseas Pakistanis to import new and used cars under gift, change of residence and personnel baggage schemes and the import has increased dramatically as 16,494 cars were imported during the first eight months of the current fiscal year.
The IMC CEO said that currently 70 percent of new car sales is being contributed by leasing which has been the major factor for market increase and the leasing facility for used cars also is likely to start soon.
About the impact of new/used cars imports, Ghayas said that cars are being imported by car dealers and investors and massive under-invoicing and flight of capital is causing loss to government revenue, as the used car dealers are not sales tax registered.
He said that vehicles imported under these schemes are not suitable for local road conditions and fuel specifications while the part and service back-up facility is also not available for these vehicles in the country.
Regarding tariff based system, the IMC CEO said that the industry, OEMs and vendors, EDB and CBR should finalise a tariff-based system that is WTO-compliant and also in the national interest.
He said that the IMC has taken many steps to protect the genuine customers with continuous increase in production, maintaining prices despite increasing costs, etc. "We have taken many measures to discourage investors and re-sellers such as detailed scrutiny of PSO, customer details and copies of NIC, only one vehicle against one NIC, accepting only new NIC, mention of NTN number, name of NIC holder with payment draft and mystery buyer surveys.
Regarding increasing capacity of IMC, the CEO said that car production capacity of the company was only 57 cars per day in March 2002 which has increased to 144 cars per day in September 2004, 180 cars per day by November 2005 while the targeted production is 200 cars per day by May this year.
Ghayas said that the industry is committed to work with the vendors so that local parts manufacturing capacity also increases in line with the production capacity increase being planned by OEMs.