The imports of used cars in Pakistan have significantly increased during the first six months of the current fiscal year 2023-24 compared to the same period last year.
According to the Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Abdul Rehman Aizaz, the increase in imports of used cars is mainly due to the elimination of regulatory duty in the federal budget for FY2023-24 on used cars of up to 1800cc.
PAMA chairman added that this initiative was meant to revive the automotive sector, however, it has had negative effects on 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,” told Business Recorder.
He further stated that the decision to remove 100% regulatory duty has only benefitted importers and companies dealing in Completely Built Units (CBUs). Most importantly, this move hasn’t provided any relief to the struggling local industry, which already grapples with significant demand-supply challenges.
Aizaz also highlighted the major revenue losses for the government due to imported used vehicles replacing locally manufactured cars. He explained that the previous policy ensured a fixed amount of dollars in taxes for the government, irrespective of the actual market prices of cars.
However, now duties and taxes are based on ex-factory prices, which leads to potential revenue shortfalls.
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