The automobile industry has existed in the country since the early sixties. Localisation was also present then with manufacturing of such components as tyres, battery, radiator, seats, trims and some body parts. However, the entry of Suzuki in 1983 (30 years ago) is regarded as the beginning of the automobile industry in Pakistan with objectives of a low priced Peoples' Car with full technology transfer and localisation in 5 years. It then cost Rs 50,000.
Similarly, Toyota and Honda were formed 20 years ago with same objectives.
Status and achievements after 30 years is as follows:
No deletion! In fact there has been some rollback since the introduction of the Tariff Based System. Same parts are deleted as in the sixties. Not a single functional engine, gearbox or electrical part is manufactured by the vendors.
Under the TBS, parts are now freely imported from third countries like Thailand, Malaysia, China, Singapore, etc. Low-priced Peoples' Car remains a distant dream even after 30 years. Price increased by 100% in the last 4 years alone, on the pretext of rupee devaluation.
Booking is done on 100% advance payment, with delivery after four to six months. Taxes are, however, transferred into the government treasury at the time of delivery. At the volume of last year (170,000 vehicles), 130 billion rupees were received by the assemblers collectively in this account. This is an unprecedented feature in any business. This amount is alone sufficient to finance the whole operations of the assemblers.
Lowest priced local car is priced at almost Rs 600,000 and has no accessories or safety features. Imported used car on the other hand, with full accessories and safety features costs Rs 550,000. Whereas huge foreign exchange is spent in the import of CKD parts, no foreign exchange is used for import of used car. In fact, foreign exchange is brought into the country in the shape of vehicles. In addition, every small car gives Rs 200,000 in revenues to the government. Last year, 55,000 vehicles were imported and 30 billion in revenues were given to the government.
The used car industry is not against the assemblers. We only want that the Pakistani customer should have the liberty to buy a car of his choice and within his means and the govt. should not provide crutches to anybody to prop them up. We are not looking for any favours from the govt. either. All we ask for is a level playing field for everybody and continuity in policies without such actions as the recent CGO 13/12 which has jeopardised billions of rupees of overseas Pakistanis and pitched the dealers and local industry against each other. If taking such action is inevitable, sufficient reaction time should be given to the stakeholders especially where the Pakistani public's interest is involved.