Imports Of Used Cars Are Up By 30% Putting Question Mark On Potential Investments In Pakistan
The import of used cars in January – December 2015 reached new high with a total of 41,257 units of vehicles imported to Pakistan. In this total, 34,765 were passenger cars (sedans, hatchbacks, and SUV). From 34,765, 25,000 were small cars, 4,036 were sports utility vehicles, and 2,456 were light commercial vehicles like vans and pickups. That is an increase of 30% compared to previous year. Hybrids have also seen a rise and around 5,000 units were imported last year.
The former chairman PAAPAM Aamir Allawala mentioned to the press that a little more than 4000 SUVs were imported to Pakistan, and that has hurt the sales of local Toyota Fortuner sales. Around 700 units of Fortuner were sold in 2015.
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The government has been trying to attract new investment from mostly foreign carmakers lately. But considering our auto policy is still not ready, the officials of those parties have raised their concerns over the influx of imported used cars. The new auto policy will help decide the fate of importers and potential investors.
Aamir Allawala, the former chairman Pakistan Association of Automobile Parts and Accessories Manufacturers, told the press:
“The government should be aware of the damage being caused to prospects of foreign investment, labor associated with local and allied industries and investment made by producers and vendors,”
It is hard for foreign, especially European, carmakers to rationalize Pakistan as their next destination if they keep seeing the increase of imported used cars that can threaten the sales of their cars locally. Also, the imports are a burden on Pakistani exchequer as well.
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Mr. Allawala revealed that existing automakers have requested the government to increase the duty on cars below 1000 cc to 20% as means of discouraging their imports, calling them “under-taxed.” Also, the point of reducing the age limit of the car from 5-years to 3-years for SUVs and mini-vans has also been raised.
It is yet to be seen what the new auto policy has in its sleeves to encourage the foreign investment yet curbing the used car imports. But one thing has to be said, opening imports of used cars has given a typical Pakistani buyer with more choice and also has made the existing carmakers to up their games.
This is only half the story. While imports have increased 30%, sales of local cars have also increased manifold. Statistics (and analysis of those statistics) are routinely published on PW blog every month.
Local car makers should see what the customers are looking for in imported cars. Customers are looking for utility, quality, reliability, safety, features, ride comfort, differentiation and theft-proofing (simply having an “out-of-market” car makes it theft proof though many local cars lack security features like immobilizer). Features is at the foremost, safety, differentiation and reliability isn’t.
Despite the fact that imports are always made more and more difficult, and local car makers are given more and more leniency, still the rate of sales of local cars is increasing more than the increase in imports.
SUVs: People buy for various reasons. Rush is also a SUV, so is Range Rover. Somebody wanting to buy Rush cannot afford Fortuner. Somebody wanting the leather finished interior of Vogue can never be satisfied with cheap plastics of Fortuner.
A plethora of SUVs exist and how can Fortuner be a substitute to all of them?
if good cars are available in pakistan at affordable price like in india,then this will automatically reduce import of used cars…i have mark x and i buy it bcz there is no other comparable new car in this budget…
This article is totally based on a recent Dawn article and is pro-industry. The whole article excludes the most important thing “CUSTOMER REQUIREMENT”.
The major stakeholder and lifeblood of the industry is consumers.
We support local cars and only forced to buy imports due to poor quality obsolete model being offered by local industry without safety features.
Look at Mehran, Bolan, Ravi, Cultus, Swift and City — all globally obsolete cars. The Bolan/Ravi is a late 1970s design not being sold anywhere outside Pakistan for ages!
The Mehran was pulled out from European and Japanese markets in late 1980s.
Local industry even excludes life saving features like airbags. (they are not even offered as an option at extra cost in most cars).
We will support restrictions on imports once local industry provides modern models in line with international market and provides critical life saving safety features.
I agree with you wholeheartedly.
Local car makers are not bothered with upgrading their products in terms of design, features, safety and technology since that would cost them and cut into their profits. For example, Suzuki made a profit of 4.2B in Sept 2015 as opposed to 1.6B in Sept 2014 and a similar case would be for Toyota and Honda. So they play politics and influence the import policy in order to sell the same thing they’ve been selling for years in order to reap maximum profit with minimum expenditure.
As far as SUVs are concerned, Suzuki has the Jimny which is frankly overpriced to the hilt. Toyota offers the Fortuner and Honda has the HRV which are relatively recent introductions which are again overpriced and lack features that are standard in most imported cars and SUVs. Audi, Mercedes and Porsche do offer SUVs but then again, it’s a niche market as the prices for their products are so high that people like me can only dream of them.
While imports do hurt the economy and decrease our reserves, as a consumer I would still buy an import as opposed to the locally made car. Perhaps if they stopped imports altogether while cutting down taxes on the local stuff and forcing the local manufacturers to introduce their internationally available models with the same specs locally, it might encourage new entrants but this would be a really drastic and unrealistic measure to take. Importers wouldn’t accept it, local manufacturers would demand time and subsidies and what not.