Local auto industry requests govt. intervention to control used cars’ imports

Islamabad: Chief Executive, Indus Motor Company, Mr. Ali Asghar Jamali, while recently talking to a group of journalists in Islamabad said that local auto industry expects urgent remedial measures from the current government in the upcoming budget to support the local auto industry and to restore investors’ confidence.

The local auto industry has requested for an increase in duties and taxes on used cars in the upcoming budget from the government, to benefit the local auto industry from the slightly improved economic activity, stable currency, and a likely cut in interest rates.

“Contradictory to our expectations of improvement in demand from Jan 2024 onwards, this year could not turn a new leaf for Pakistan’s Auto Industry due to heavy import of used cars,” said Mr. Jamali.

It is worth adding here that local automakers witnessed a slight improvement of about 28% in their sales in February 2024 against last year same period (11,593 in Feb ‘24 vs 9,011 in Feb ‘23). However, on the other hand, the imports of used cars recorded over 711% (3,213 against 396 units) increase in February alone, against the same period last year.

If this situation persists, our vendors industry will be forced to close down their businesses due to this unsustainable business environment, with plant utilization capacity levels between 25 to 30% for the past few months. While, on the other hand, huge investments by vendors in order to meet surging demands of the auto industry, are now lying idle and only producing parts for vehicles at approx. 100,000 levels.

Chairman, PAAPAM has recently mentioned that overall, the local auto industry has invested about $2.5bn and contributed about Rs 400bn in taxes in FY2022 alone, while it creates about 2.5 million direct and indirect jobs within the country, which continues to nullify the potential and magnitude of the industry.

The import of 3068 used cars per month on average (taken from July 2023 to April 2024 imports) has been rendering local businesses ineffective, which will result in unemployment and economic loss (in terms of taxes).

Also, illegal financial channels continue to be used for foreign payments related to used cars. While, on the other hand, the local auto industry uses all legal means for bringing parts into the country, which continues to present a huge challenge.

Similarly, the government should ensure sufficient mechanisms are in place, in which used vehicles are only allowed to be imported within the country for overseas Pakistani family’s usage.

Besides, he added, the imports also hurt the country’s reserves and depreciates the value of PKR, along with threatening future investments due to the economic uncertainty.

He further mentioned that, Toyota’s newly launched Hybrid Electric Vehicle – Toyota Corolla Cross’ first quarter performance has been satisfactory. Toyota Corolla Cross has the highest percentage of localized parts in this category, which is over 50%.

He added that as many as 13 brands are cumulatively producing 40 plus models locally, with a combined capacity to produce 500,000 units annually, but imported used cars continue to create sustainability challenges for the local auto industry.

He concluded that in order to support the local auto industry, the government is requested to rationalize import taxes on used car imports to curb the influx of imported vehicles to revitalize the local market and safeguard the interests of local manufacturers and ensure the sustainability of countless jobs.

Saleem Mahmood
Chief Executive

Saleem Mahmood, founder and CEO of “The Passage,” has a passion for strategic PR and communications. His journey began as a public relations officer at Pakistan International Airlines, leading him to establish The Passage in 2000. Under his leadership, the company has executed thriving PR campaigns and set industry standards. Mr. Mahmood holds a Master’s degree in International Relations from Karachi University.