KARACHI: Pakistan has witnessed a sharp surge in the imports of used cars during the first six months of the current fiscal year 2023-24 compared to the same period last year.

Abdul Rehman Aizaz, Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), attributed this phenomenal increase in used car imports to the removal of regulatory duty in the federal budget for FY2023-24 on used cars of up to 1800cc.

While this move was intended to revitalise the automotive sector, Aizaz noted that it has proven detrimental to the local auto industry. “This trend bears significant economic implications, particularly for local vendors, facing an estimated loss of a staggering PKR 36 billion, pushing them towards closure of their businesses,” Aizaz stated.

Import of used cars: Surge causing adverse impact on local auto sector

He pointed out the irony that the elimination of the 100% regulatory duty only benefits importers and companies dealing in Completely Built Units (CBUs), without offering any relief to the struggling local industry, which already faces significant demand-supply challenges.

Moreover, Aizaz highlighted that the replacement of locally produced cars with imported used vehicles is resulting in substantial revenue losses for the government. He explained that under the previous policy, the government received a fixed amount of dollars in taxes regardless of the original market prices of cars. In contrast, now duties and taxes are based on ex-factory prices, resulting in potential revenue shortfalls.

Copyright Business Recorder, 2024