LAHORE – The imports of used cars have witnessed 684 percent increase in the first six months of the current fiscal year compared to the same period last year.
More than 16,500 units of used cars were imported from July to December 2023, marking an exponential increase compared to the approximately 2,100 used cars imported in the fiscal year 2022-23.
Breaking down the categories, there was a significant uptick in the import of economy and small low-segment cars, with almost 9,900 units brought in, along with commercial vehicles, SUVs and Vans, which saw nearly 6,600 units imported. Furthermore, luxury vehicle imports also saw a notable spike, among other categories.
Abdul Rehman Aizaz, Chairman, 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.
He noted that while this move was intended to revitalize the automotive sector, 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.
He pointed out the irony that the elimination of the 100pc 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, Mr. Aizaz highlighted that the replacement of locally produced cars with imported used vehicles is resulting in substantial revenue losses for the government, as taxes and duties that would have been generated from locally produced cars are now being missed out on. 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, whereas now duties and taxes are based on ex-factory prices, resulting in potential revenue shortfalls.
The surge in used car imports presents both challenges and opportunities for the automotive sector and policymakers alike, necessitating a careful reassessment of policies to ensure sustainable growth and support for local industries.
