Import of Vehicles and Spare Parts Increase Due to High Demand

Despite the decreasing value of the rupee against the dollar, imports are surging in the auto industry. According to the latest data available from the Pakistan Bureau of Statistics’ (PBS), imports of cars increased by 6% in Financial Year (FY) 2018, for a total of $456 million, from $431 million during the same period last year. The imported cars consisted of three year old models.

Currently, localization figure for the assembled cars in Pakistan stands at around 40%-70%. Pakistani automakers mostly import parts and assemble them in Pakistan, contributing to the ever-growing import bill. Import of accessories touched $809 million against last year’s number of $660 million.

As per Faizal Sultan of BMA Capital, the imports of cars and Light Commerical Vehicles (LVCs) recorded a growth of 21% in FY 2018. It is pertinent to mention here that all major automakers in Pakistan including Honda and Suzuki have jacked up prices multiple times this year due to the decreasing value of the rupee.


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More Numbers

The rupee saw its value depreciate by 21% since December 2017. Despite that, the imports kept on amassing in the auto parts industry as mentioned above. The imports of parts and accessories for heavy vehicles such as trucks and buses increased to $406 million from last FY’s $252 million worth of imports.

The imports of Completely Built Units (CBUs) heavy vehicles saw a drop as the figure decreased from $316 million in FY17 to stay at $234 million in FY 2018. Due to strict measures, auto companies are switching towards locally assembled heavy vehicles whose localization currently stands at 40%, an official in the industry told.

Imports of spare parts for two-wheelers increased as well in FY 2018. In FY 17, the assemblers imported bike parts worth $92 million against FY 18’s imports of $106 million. The imports for CBU bikes spiked by a staggering 59%, touching $5.7 million.

Experts estimate that local assemblers might be forced to increase their localization ratios due to the increasing costs of imports.

The caretaker government has taken steps to minimize illegal imports and loopholes in the current system. For example, importers now need to transfer funds from abroad to pay for the imports. This system makes sure that the foreign currency reserves of Pakistan don’t go to waste.

Via Dawn