Public Accounts Committee (PAC), in its recent meeting, asked the government to reduce import duties on used cars in Pakistan.
The committee members rationalized that encouraging car imports will create tougher competition for local car assemblers. The move will offer more choices and force local assemblers to strengthen their value chain, they added.
PAC learned that the local car assemblers have collected around Rs. 217 billion from customers in advance bookings this year. Toyota Indus Motors Company (IMC) has collected Rs. 112 billion while Pak Suzuki and Honda Atlas have collected Rs. 41.66 billion and Rs. 23 billion respectively, Secretary of Industries and Production highlighted.
He explained that they collected 20 to 100 percent of the car’s price as “advance booking” from customers despite the fact their production facilities are not fully operational.
He further detailed that companies are compelled to deliver vehicles within 60 days of booking, adding that Toyota can produce 5,600 vehicles per year, but it does not do so because of its partially operational plant.
Honda Atlas Cars Limited (HACL) and Pak Suzuki Motor Company (PSMC) announced another production pause earlier this month. In a notice to the Pakistan Stock Exchange (PSX), the companies cited supply chain issues stemming from the government’s sanctions on imports and the deteriorating economy.
While PAC and the public want a reduction in import duties for used cars, the government is unlikely to do so due to the dwindling foreign exchange reserves.
A common consensus among experts suggests that, in such circumstances, the government and the auto industry should work in tandem rather than clash with each other.
