Auto Industry Asks Govt to Impose 25% Regulatory Duty on Small Used Cars

The auto industry has requested the federal government to impose a 25 percent regulatory duty on imported small (used) cars below 1,300cc while maintaining a 15 percent regulatory duty on vehicles above 1,300cc.

The rampant and illegal import of used vehicles into Pakistan has led to significant job losses in the automobile industry and worsened the misuse of schemes intended for overseas Pakistanis, which continues to undermine the industry, the Pakistan Association of Automotive Parts & Accessories Manufacturers said in a letter to the Prime Minister on Tuesday.

“Our Association, representing 300+ auto parts manufacturers, was very hopeful that Federal Budget 2024-25 would contain strong measures to discourage this illegal trade which is also used as a parking lot for black money. We are seriously dismayed by the Budget announcement regarding the import of used vehicles. The Finance Act has imposed a regulatory duty of 15% on imported used vehicles but only above 1,300cc engine capacity,” the association said.

“This is very disappointing for the 400,000 Pakistanis directly employed by the auto parts industry. The Customs import data for the period January to May 2024 clearly demonstrates that 62% of all used cars imported into Pakistan are below 1,300cc”, the letter explained.

The association also requested the following measures to provide a level playing field to the domestic industry on the pattern of other automobile-producing countries:

1. Currently, the value of a used vehicle is depreciated at 1% per month from its manufacturing date for the calculation of the duty amount. This depreciation rate should be reduced to 0.5% per month.
2. As the vehicle is supposedly imported on behalf of overseas Pakistanis under Gift, Baggage, or Transfer of Residence schemes, the vehicle must be first registered in the name of the importer and subsequent transfer should only be allowed after a period of three years.