Commercial import of used cars urged

All Pakistan Motor Dealers Association (APMDA) has requested the federal government to allow commercial import of 10-year used cars and those without an age limit for overseas Pakistanis. Local assemblers have increased prices manifold taking purchase of cars out of the range of the common man.
Secretary Commerce Zafar Mahmood, during a recent meeting of Senate Standing Committee on Commerce, stated that auto industry based in Pakistan was earning substantial profit but not enhancing output which implied it was disadvantaging Pakistani consumers. Cars assembled in India are expected to be seen on Pakistani roads at the end of current year after phasing out of negative list comprising 1,209 items.
In 2005-2006, import of used vehicles was allowed after a long gap of 12 years. This was subsequently restricted to import of three-year old used vehicles only under different schemes, as a result of which local assemblers acquired a monopoly on prices and supply and freedom of choice of consumers was severely restricted.
APMDA, in a letter to the federal government, has requested to allow commercial import of used vehicles of up to 10 years of age in addition to three different schemes ie transfer of residence scheme, gift scheme and baggage scheme. APMDA argues that if the government allows import of 10-year old cars on commercial basis, it would bring the imports of used vehicle business into the tax net and will help expand the tax base.
"We suggest that only the certified members of APMDA be allowed to import used vehicles on commercial basis for the sake of transparency," said APDMA Chairman, H M Shahzad in the letter which has been sent to the President Asif Ali Zardari. According to the Association, the existing schemes for the import of used vehicles are for the facilitation of overseas Pakistanis. APMDA further said that local assemblers were enjoying the monopolistic and consumer unfriendly benefits of a ban on used vehicle import for the last many years.
"Local assemblers fleece common people in the shape of 100 percent advance payment at the time of booking of a car, delivery of which is possible after three to six months. As a result of delays in car delivery, the black marketeer charges a hefty premium "on money" from the buyers," Shahzad maintained. He further stated that local assemblers arbitrarily increase the price for their car as and when they desire, resulting in significantly greater financial burden on the buyers, adding that profits of Pakistani assemblers was higher than neighbouring countries.
Local assemblers had promised to achieve localisation but they did not achieve it despite the passage of many years. AMMDA further argued that decline in Regulatory Duty (RD) was a huge revenue loss, which could be verifiable from all the Collectorates of Customs.
The Association said notification C.G.O 01/9 had deprived the legal, social and ethical right to obtain the depreciation at two percent per month on old and used vehicles of above 1800cc imported by overseas Pakistanis. This facility was available for the last 30 years, before it was abruptly withdrawn.
As per current SRO the depreciation on the taxes and import value of old used vehicle is at one percent per month. The importers are already paying high tariff rate on account of Regulatory Duty at 50 percent on the vehicles of above 1800cc (cars and jeeps) and devaluation of currency.
Local assemblers are not assembling cars above 1800cc. The imports of above 1800cc cars and jeeps would not hurt local auto assemblers, unless they are charging an unfair profit on their smaller capacity vehicles, the Association maintained. APMDA has proposed to the government to impose fixed rate of duty on the import of used vehicles of engine capacity above 1800 CC. The government has also been requested to simplify import procedure of used vehicles of all engine capacities and to fix duty on all used vehicles.