PAAPAM Wants 10-year ‘Auto Parts Localization Policy’ to Reduce Car Prices

Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has appreciated Prime Minister Imran Khan for taking notice of higher automobile prices in the country, which is mainly due to lower localization of parts and government’s strict tariff and taxation policy.

Related: Auto Parts Vendors Criticize Assemblers for Low Localization & Higher Prices

According to PAAPAM, Pakistan is being exploited as a consumer country instead of a manufacturing country. Senior leaders of the association during a meeting held in Lahore said:

“We should focus on ‘Make in Pakistan’ not “Assemble in Pakistan.”

Endorsing the federal cabinet direction to launch an inquiry in this regard, PAAPAM members said the rates of vehicles can be reduced through full implementation of localization regime. They further added that imposition of RD, additional customs duty, devaluation of rupee and higher federal excise duty are major burden on the consumers of cars.

“It’s the time to deeply analyze the root cause of high prices of cars in the country and devise a long-term strategy to timely produce the vehicles in line with demand, besides devising and implementing 10-year ‘Auto parts localization policy’ (APLP) to ensure the localization of all value-added parts.”

It is also feared that in absence of a transparent import regulatory system for automotive parts economic situation will have a further dip with New Entrants, coming into field and launch of Electric Vehicles (EVs) being on the doorstep. The participants of the meeting said that the entire industry is dependent upon unregulated imports resulting in higher car prices. They added:

 “PAAPAM, as a major organ of the Automotive Industry in terms of employment, revenue contribution to exchequer is fully geared up to venture formally in global exports/supply chains, an area so far denied to local parts manufacturers.”

They lamented that in spite of having exclusive Pakistan’s domestic market for over three decades the country has failed to achieve anticipated localization targets, leading enormous foreign exchange outflows in exchange of costly parts’ import, having no check at all.

Related: Low Localization and the Need to Shift to EVs

PAAPAM said that the trio-government regulators in the automotive sector namely EDB (Engineering Development Board)/MOI&P, MOC and FBR have yet to devise a transparent and coherent system for regulating imports of CKD kits for lot many variants of vehicles locally assembled.

Full story: The Nation

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