The efforts of All Pakistan Motor Dealers Association (APMDA) to push its proposal for the trade policy 2011-2012 asking that up-to 10 years old used vehicles be allowed for commercial import, has caused a scare among the local domestic auto industry here.
Pakistan Automotive Manu-facturers Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Association (PAPAAM), who strongly oppose further liberalisation of the import of used automobiles fear that in case government allowed the proposal, "it could be highly detrimental for the local domestic auto industry."
According to information available here the proposal is based on the premise that locally assembled cars are priced very high. APMDA's view is that in addition to existing schemes for the import of used vehicles like transfer off residence scheme, gift scheme and baggage scheme, the step of importing 10-year old cars would be in line with government's policy of enhancing documentation of the economy.
They are also of the view that the import of used cars would be a ready answer to providing affordable cars to local consumers. They think that this would not only provide an environment of healthy competition but would also ensure a steady supply of quality and reasonably priced cars.
PAMA officials had reportedly said that vested interest groups are behind the demand for commercial import of used vehicles and a decision to allow commercial import of used vehicles would be fatal for local manufacturers. PAMA believes that imported used cars would be in such a run down state that they would soon find their way to junkyards at the cost of country's second highest revenue paying industry, which is providing direct and indirect jobs to millions of people. Furthermore, the national exchequer would also suffer if further age relaxation for commercial import of used vehicles is allowed.
As it is, the import of five-year-old cars is already causing embarrassment to the government, which had given this facility in order to make cheaper-priced cars available to consumers. Ironically, most of these used cars are priced at the rates of the brand new cars manufactured locally.
Ground reality is that imported used cars currently flooding the local market have extremely high prices compared to their age. An imported five-year-old Suzuki Alto, for example, with an engine of 660cc, depending on its condition, is being sold in the local market at Rs 700,000 to Rs 750,000, whereas one could buy brand new locally produced 1000cc Alto at the same price. The cost of an used Daihatsu Mira 660cc is Rs 700,000, while a brand new Suzuki Mehran 800cc is available at Rs 550,000.
Similarly, used models of Toyota Vitz and Passo 1000cc, the most imported brands, cost a little over Rs 1.1 million, while their locally manufactured corresponding vehicle, Suzuki Cultus 1000cc is being sold for Rs 950,000. The same is the case with the imported 1300cc Toyota Corolla/Fielder/Probox and 1800cc Premio that are available in the market for Rs 1,500,000 and Rs 2,500,000, respectively. Vehicles in the same category of 1300cc and 1800cc, produced by local manufacturers like Honda Civic and Toyota Corolla/Altis fall in the price range of Rs 1,450,000 to Rs 2,100,000.
Local auto manufacturers estimate that import of used cars would cause immense damage to the local auto industry and would also result in depletion of valuable foreign exchange through dumping of junk cars in the country.
They emphasise that such cars are either almost at the end of their productive life or are not compatible with Pakistan conditions. Often the odometer of such used cars is reversed, using unscrupulous techniques to give false impression that the vehicle has done low mileage. There is also no after sales service and parts support for such vehicles with the result that the customer suffers.
Local auto industry is agitating against, what it describes "absurd" new demand of the lobby that is pushing for import of 10-year old vehicles as it does not contribute to jobs or technology transfer and also evades taxes. "This lobby is misleading the government towards falsely believing that the prices of locally produced cars are extremely high. The local cars manufacturers have already provided the government with authentic data to prove that the prices of cars produced in Pakistan are in fact lower than many other countries, including India and Thailand" auto industry sources said.
If the government continues with further relaxation and allows commercial import of cars that are up to 10 years old, it may lead to closure of local auto manufacturing units and loss of jobs for more than two million people in the auto and allied engineering industries. It would also greatly harm consumers in the long run, as they would end up buying high priced junk cars with no spare parts and after sale service support and hence low life, they said.
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