PAAPAM raises alarm over rampant misuse of used car import schemes

LAHORE: The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has raised alarm over the rampant misuse of used car import schemes —originally intended for overseas Pakistanis — which now fuel a Rs 200 billion black market and threaten the survival of Pakistan’s auto parts industry.

Introduced under the Gift, Transfer of Residence, and Baggage schemes, these provisions were meant to facilitate genuine personal vehicle imports. Instead, they’ve become conduits for commercial exploitation, money laundering, and tax evasion.

Vehicles are imported using purchased passports and paid for via Hawala channels, then sold through unregistered dealers with no FBR reporting — unlike locally assembled vehicles, which require full tax documentation.

“This is not just a loophole — it’s a parallel economy,” said a PAAPAM spokesperson.

“Each imported used car displaces Rs 1.5 million worth of local parts, costing vendors Rs 60 billion in lost sales and eliminating 40,000 skilled jobs annually.”

Pakistan’s auto sector now includes 13 global brands, with four more plants in development and over 40 models produced locally. Despite a market size one-tenth that of regional peers, local vehicles remain price-competitive due to up to 65% localisation by 1,200 domestic vendors.

With new quality standards for locally manufactured vehicles and commercial import of 5-year-old cars now approved, PAAPAM calls for an immediate shutdown of these backdoor schemes. Their continued misuse undermines fair competition, damages consumer trust, and erodes the integrity of Pakistan’s manufacturing base.

Copyright Business Recorder, 2025