Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has estimated the value of fake and illegal automotive spare parts in the after-market at Rs. 22 -25 billion.
Despite many crackdowns from government authorities and legal action from Original Equipment Manufacturers (OEMs), the fake or counterfeit automotive spare parts market is prospering in Pakistan — at least four in every five automotive components sold are fake or illegal.
The guesstimate of fake spare parts accounts for about 80-90 percent of the overall after-market for spares (in retail outlets), estimated at about Rs 2500 crore (as of June).
Most common in counterfeit or fake parts are clutch parts, filters, lamps, wipers blades, bearings, steering arms, as well as life-saving parts such as brakes and brake linings. Counterfeit parts are not only rambling in the case of cars and sports utility vehicles, but are equally widespread for trucks, buses and motorcycles, as these are priced 20-30 percent cheaper.
Mumshad Ali, Chairman (PAAPAM), said,
“Pakistan does not have mandated safety standards for after-market products; as a result of which import of counterfeit products cannot be checked. Unfortunately, it is not possible to quantify the production in the unorganized sector and the trading of counterfeit goods as much of it remains unreported, undetected and unnoticed.”
Owing to the ease of manufacturing, packaging and importing these products and the higher margins on the sales of counterfeits, retailers and mechanics prefer these. The short replacement cycles of some parts, supply constraints faced by original component manufacturers and legal shortcomings are driving the flourishing fake parts market.
The Global Status Report on Road Safety 2013 published by the World Health Organization (WHO) declared road accidents in Pakistan. The report recorded at least 5,192 deaths in 2010, but the National Highway and Motorway Police (NHMP) and Rescue 1122 put the annual death toll due to road accidents at around 12,000. PAAPAM sources said in this regard about 20 per cent of all road accidents in Pakistan could be either directly or indirectly ascribed to the use of counterfeit auto parts
The fake parts market is also leading to a huge loss for the government — it is losing about Rs. 12 billion a year in tax revenue as none or only a few fake parts come within the country’s tax framework.
Car manufacturers complain the use of fake parts impacts a vehicle’s performance and, consequently, its brand value. A few manufacturers, backed by local police, have started conducting raids in this regard. Recently, one local car manufacturer raided the outlets of counterfeit spare parts and sent legal notices to the fake parts manufacturers. These manufacturers were selling their products under the brand name and logo of the OEM in Lahore, Rawalpindi and Karachi.