Belt Tightening?- Luxury Cars Worth $1.2Million Imported in Nov 22

The current government has been talking about belt-tightening to save US dollars and to stablise the economy. And the auto industry is one of the most affected industries due to this policy. To control the flow of dollars, the State Bank of Pakistan (SBP) is not issuing the Letters of Credit (LCs) for CKD kits for the car assemblers, which has resulted in hindrances in production and even temporary shutdowns of the plants. However, the import data shows a totally different picture, proving that the belt-tightening is only for the car companies but not for the import of luxury cars.

Names of Imported Luxury Cars

As per data, the imported cars number reached 54 in November 2022, including 8 Lexus and 46 Land cruisers & Prados. As per economist Ali Khizer, “the total assessed value (on which duty to be applied) is $1.2 million (approximately PKR 27 crores)  for 54 cars i.e., $22k/car. However, these expensive cars’ prices are underdeclared and wrongly assessed.”

In easy words, this is a clear drain on both Forex and taxes. And Khizer rightly asked, Is it belt-tightening? 

The imported cars number to reach 54 in Nov 22 if we include 8 Lexus in it

The total assessed value (on which duty to be applied) is $1.2 mn for 54 cars i.e. $22k/car

These expensive cars prices are underdeclared and wrongly assessed

There is drain on both Forex and taxes https://t.co/9nltJS3oBF

— Ali khizar (@AliKhizar) December 15, 2022

The numbers clearly show the double standards of the authorities, especially for the car industry. Continuing such policies will keep harming the auto sector and eventually impact the end consumer. The local car industry has been facing the heat for the last few years; first, it was COVID-19, then there were after-effects of the pandemic, and then there are local economic and political uncertainties. These all have hammered the production and sales of cars in Pakistan, and there seems to be no respite, and such import numbers further hamper the industry. 

CKD/SKD Imports Down 

Last week, the Pakistan Bureau of Statistics (SBP) report revealed that the imports of Completely Knocked Down (CKD) and Semi-Knocked Down (SKD) kits have fallen by 33.51% during the first four months (July-October) of the Fiscal Year 2022. The data shows that the import in FY2022 was worth $131,991 compared to $219,183 in the same period last year.

Similarly, the imports of CKD motorcars dropped by 31.55%, while motorcycles saw a drop of 18.47%. Last but not least, the import of parts and accessories has declined by 18.89%.

And these import numbers clearly show the intention of the current government. 

What is your take on the import of luxury cars? Please share your thoughts in the comments section.