More than 22,000 cars were imported into the country in the first four months of FY13. That tally builds on top of the import of 60,000 cars in FY12, which was in turn an increase of 162 percent over the previous fiscal.
Sales of domestically assembled cars grew by only a fraction of this pace during the same period. Imported cars have eaten up a 26 percent share in total car sales in the country, leaving local assemblers struggling with higher fixed costs per unit or production due to low capacity utilisation.
The vending industry is also drowning under the surge of car imports. Industries associated with auto assemblers in the country have suffered Rs7 billion in lost sales, over the past year. These industries number about 400 units and employ about two million workers, whose livelihoods are on the line due to the imported substitutes.
The grumble list doesn end here. Car imports raked up a bill of Rs371 million, draining the countrys thin foreign exchange reserves.
Consumers may be happy to buy imported cars but their smiles are usually wiped off by the relatively higher priced spare parts and lack of mechanics knowledge of the computerized engines of imported cars.
In CY11, GoP had eased car import terms, allowing cars up to five years old into the country. The easing has brought more than 90,000 cars to the country so far.
In contrast to Pakistan, India attracted 78 FDI deals in the automotive sector in CY11 which has now made India the seventh-largest passenger vehicle manufacturer, and the second-largest medium and heavy commercial vehicles and two-wheeler market, according to a recent World Bank report.
By contrast, the few auto assemblers present in Pakistan, have spent the past few months running pillar to post in lobbying GoP to do away with car import relaxations. Now that the government has finally complied, the industry is seeking a complete ban on auto imports.
PAMA and PAAPAM, associations representing the domestic industry are of the view that they deserve further protection to be able to improve scale and localisation.
On the other hand APDMA, a local think tank, highlights that Suzuki, Toyota and Honda have been present in the country for decades, yet car prices continue to rocket. It calls for GoP to ease import conditions to beef up competition to the local assemblers.
GoP would stand to benefit from lower car prices and increased mobility for the general public but whether it will go the route of boosting competition or protecting the domestic industry, remains to be seen.
Comments
Comments are closed for this article.