Chairman Aamir Allawala and Vice Chairman Nabeel Hashmi of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has described the government's decision to increase the age limit for import of used cars from 3 to 5 years, as the last nail in the coffin of automobile parts manufacturers.
Expressing their severe disappointment and dismay on the government 's decision on Thursday, they said that a total of 1600 vendors and parts manufacturers employing over 2,00,000 skilled workers are producing world class parts at prices lower than international levels.
These parts meet global quality standards and are manufactured for renowned brands Suzuki, Toyota and Honda. During the last two years, the parts manufacturers have been on the verge of closure and squeezed due to ever increasing cost of production along with reduction in car production by up to 60 percent due to economic slump in the country, they added.
They said the negative brunt of this decision, which is sure to the last nail in the coffin of automobile parts manufacturers, will be borne by common man. Hirofumi Nagao, MD & CEO of Pak Suzuki, which has 50 percent local market share said "import of used car will neither bring any investment nor create employment and no transfer of technology will occur.
Besides the process will not be fully documented and while users have to deal with high maintenance costs and pricey spare parts and limited after sales service without any warranty. Also foreign exchange per vehicle consumed in the import of used cars would be much higher than the CKD operation, resulting in additional burden on already limited foreign exchange reserves, he commented.
Talking to Business Recorder Chairman Engineering Development Board (EDB) Aitezaz Niazi admitted that import of used cars would badly affect the local automotive parts and accessories manufacturing industry. However, he said that the Japanese Car Manufacturers who have almost monopoly in Pakistan's car manufacturing industry and a captive market, forced the government to take this unpleasant decision since they were not localising and indigenizing their products to bring down prices of cars to make them affordable for the Pakistani customers.
Niazi said that automobile industry has great potential for growth, as the motorization level is very low in Pakistan. What is needed is the localisation and indigenization as the car manufacturers have done in other countries of Asia. In Pakistan Toyota Company is selling 31 percent of its Corolla cars as compared to its entire sales in Asia, but it is not transferring the car manufacturing technology to Pakistan, he added.
He hoped that the prices of cars will come down in the country after increase in the age limit of imported second hand cars from three to five years under personal baggage, gift and transfer of residence schemes. According to reports, the Commerce Ministry issued the SRO to give effect to the government's long awaited decision.