Liberal import of used cars harming local industry

Experts are questioning the rationale behind import of used cars as the government is attempting to pull in more foreign investors in the upcoming auto industry development plan. Policy makers are working at cross-purpose as the government envisions European car makers to enter Pakistani markets while the liberal import of used cars, exploiting baggage and gift schemes, is denting the local industry and the national exchequer.
European car makers, keen to invest in Pakistan, have categorically told the government about stance and future policy on importing the used cars. A data of the imports continued to thrive unabated as between January and December 2015, a total of 34,765 passenger cars were imported, including 25,000 small cars, 4,036 SUVs and 2,456 pickups and vans.
The total imports last year were 41,257 units. PSMC, excluding the taxi scheme, produced around 85,000 vehicles in 2015. Almost 5,000 units of hybrids competing with Civic and Grande were imported in 2015, while over 4,000 SUVs affected the locally produced Fortuner, of which around 700 units were sold during the same period. The illegal trade, going on rampantly under the guise of providing small segment cars, has ripped off consumers, giving maximum benefits to traders who charge premium on cars imported before the levy of a one-percent duty.
The three segments of domestic auto industry, small cars and minivans, high-end sedans, and SUVs are being hurt by the rampant misuse of concessionary schemes of importing used cars meant solely to help overseas Pakistanis. "Availability of this market to local industry would have enabled the company to use its capacity and to develop confidence to make future investments in capacity creation and new models introduction," says former PAAPAM chairman Aamir Allawala.
"The government should be aware of the damage being caused to prospects of foreign investment, labour associated with local and allied industries and investment made by producers and vendors," Aamir said. "In 2015 the domestic auto sector has led the LSM growth in the country and therefore needs to be encouraged. The industry requests the government to increase applicable duty by 20 percent on the import of small cars, below 1000cc, as these cars are under taxed," he added.