PAAPAM Laments Used Car Imports- Again!

PAAPAM has once again lambasted the rising imports of used cars in Pakistan during the current fiscal year. Abdul Rehman Aizaz, Chairman of PAAPAM (Pakistan Association of Automotive Parts & Accessories Manufacturers), attributed the increase in used car imports to the removal of regulatory duty in the federal budget for FY2023-24 on used cars of up to 1,800cc.

Aizaz said while this move (removal of regulatory duty) was intended to revitalize the automotive sector, it has proven detrimental to the local auto industry. He stated:

“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.”

He pointed out the irony that the elimination of the 100% regulatory duty only benefits importers and companies dealing in Completely Built Units (CBUs), without offering any relief to the struggling local industry, which already faces significant demand-supply challenges.

Moreover, Aizaz highlighted that the replacement of locally produced (assembled) cars with imported used vehicles is resulting in substantial revenue losses for the government. He explained that under the previous policy, the government received a fixed amount of dollars in taxes regardless of the original market prices of cars. In contrast, now duties and taxes are based on ex-factory prices, resulting in potential revenue shortfalls.

Related: PAMA Says Used Cars Fill the Market Vacated by Locally Assembled Vehicles

While no actual figure of used cars arriving in the country during the said period was given, an earlier report claims more than 21,874 used cars were imported between July and January of the current fiscal year, whereas in the same period last year, only 2,990 used cars were imported. As previously discussed, it is worth noting that the local vendor industry has yet again failed to see that the import of used cars provides an opportunity to sustain their operations and capitalize on their investment and technology.

Local vendors have a fantastic opportunity to supply components that are highly sought after by JDM customers through developing parts for popular imports like as the Daihatsu Mira, Nissan Dayz, Toyota Vitz, and Aqua, among others. Ironically, parts makers prefer to biblically stick to serving the local assemblers & their obsolete offerings despite sales plummeting to 20-year-old levels with no improvement in sight.

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