Government Suffered Loss Of More Than Rs12bn Due To Import Of Used Cars In Pakistan
Vice Chairman of Pakistan Automobile Assemblers Dealers Association (PAMADA) Iqbal Shah revealed to the press that the government has suffered an estimated loss of more than Rs12bn due to the imports of used cars in the first four months of 2016 in terms of duties and taxes. The amount of used cars imported to Pakistan in the time period of Jan-Apr16’ has almost doubled in the corresponding months of the previous years.
The Vice Chairman said,
“As per data from customs, 18,664 units of all segments were imported in January-April 2016 while the number of imports was 12,401 in January-April 2015, showing 51% increase,”
Simply put, the local automakers have lost 18,664 potential buyers to used imported cars. And local carmakers have to pay taxes on each unit they sell. The duties and taxes on used imported cars are far less than what an existing local automobile manufacturer has to pay to the Pakistani government. So you can say the government lost the chance to earn more than Rs12bn because people bought foreign cars instead of locally made cars. Besides, this increase in imports has also caused the local businesses (auto parts makers and vendors) to lose the potential business in the form new cars that would have been bought instead of the imported cars had there been a restriction on the imports of the used cars.
Also Read: Pakistan Government Considering To Almost Double The Fixed Taxes On Used Imported Cars
Mr. Shah also questioned the thinking behind lowered taxes and duties on the import of used cars especially when the government is looking for a boost of foreign investment. No new automaker is going to step in a market where the consumer can buy a slightly used similar car at a lower price. He was quoted saying,
“The policy makers are working at cross purpose as on one hand the government envisions global car makers to enter the Pakistani market and on the other hand liberal import of used cars is allowed,”
Here are a number of cars imported in January-April 2016 against January-April 2015 in different categories.
|
January-April 2016 |
January-April 2015 |
|
|
Economy Segment Cars |
3,394 |
1,902 |
|
Small Segment Cars |
6,666 |
4,541 |
|
High Segment Cars |
2,251 |
1,247 |
|
Light Commercial Segment Cars |
4,869 |
2,997 |
1. Government has always been losing money. We have heard it our entire lives, how much money government is losing.
2. “the local automakers have lost 18,664 potential buyers to used imported cars”.
Not at all. Local manufacturers are operating at full capacity. Some plants are not operating at full capacity, such as Honda Civic. Compared, the imports are of cars 12-13 lakhs price, whereas Civic is 26 lakhs price. If the imports were banned, government would have lost even more money because the customers would neither have bought imports nor would they have bought local car. The government at least got some tax as a result of imports, because imports are addressing a certain part of the market for which local manufacturers are not catering.
3. “this increase in imports has also caused the local businesses (auto parts makers and vendors) to lose the potential business”.
Wrong again. New cars need spare parts to be built. But old cars also need spare parts replacement. In fact a used import immediately needs replacement of lots of parts such as tyres, brake pads, engine oil etc. In the future, the car, whether bought new local or used import, will keep running and the need of spare parts would be ever-present. Auto parts vendors and barber shops will never go out of business.
Some time ago Khawaja Mohammad Asif told in a press conference that government get healthy profit from import cars and local assemblers just fooling the people.
This new script is totally made by Suzuki Pakistan because people buy small imported car in seven lac rather than teen daba mehran and buy vitz rather than BAKWAS cultus. If tax increases on import cars than the monopoly of local assembler more strong.
This is non-sense! A big lie! Government awam ku loot ky mar deygi per kabhi loss nhi hone deygi apne ap ku! 12bn ka profit hi hua houga loss kabhi nhi!
Bull $h!t story. Local auto-makers are unable to meet the requirement of customers, in terms of variety, quality, reliability, features, availability and price. Suzuki is producing trash. Toyota reduces quality and increases price each year, with absolutely no feature addition year over year. Honda, just wants to sell every car at double its actual value.
The deficit is met by imported used cars, and people are more than happy with them. This obviously pains the 3 big players as their deep pockets have started becoming lighter.
Finding no other way to pressurize government, they have instigated PAMADA to dish out a false statistic, thereby trying to lure the government into the trap of big 3. The truth is that the sales volume of used imported cars has increased beyond the sales volume of big 3 combined.
This is the first sign of the tremors they have felt after the new auto policy and customer shift.
The new China TT aka Mehran duplicate in 250k Rupees is big slap on their Face
I don’t like this concept of money not earned is money lost… the government didn’t lose a dime, they just didn’t extract all the money that is left in a common man’s pocket…
and that mehran has air conditioning and auto windows also…
Why do we forget that the government is there to SUPPORT ITS PEOPLE, the role of government is NOT TO EARN MONEY, rather PROVIDE BETTER SERVICES TO ITS NATION, if the government has fallen to implement rules of safety, quality, technology and fair competition (keeping in view it doesn’t even know the profit/loss statements of these local assemblers) and its people feel they are better off with used cars, then WHAT THE HELL IS THE PROBLEM WITH THEM??? People are solving their issues themselves and the government doesn’t want them to, instead it has LOST MONEY DUE TO OPPORTUNITY COST? Which God forsaken economic/business book has ever counted opportunity cost as a loss? My late grandfather was right, “us awaam ka koi haal nahi bachta jiski hukumat dukandari shuru kerde”
How the hell is that a loss? The govt gets custom duty plus sales tax on import of car .so that means surplus for the govt .how the hell is that in anyway a loss? This association is not fooling people but also govt . I am in for new entrants . Bmw and mercedes are already perfect entrants that came into pakistan with their imported cars
Maybe if the local assemblers didnt produce Shit cars, people woukdve gone for the local ones instead of the imported ones
looks like someone has again bribed the govt to do so ….. by the way if they so concerned about loss to govt why don’t they bring the billions of $s back to the country …… they are traitors of utmost caliber
exactly my point as well !
well SAID !
i really appreciate the fact that you used a vital term from Applied Economics in your write up.
an EVEN BIGGER slap then 😀
hahah Barber Shops 😀 !
Bhaio aur Behno….. This article is requested to be written by ISHAQ DOLLAR by paying them a bag of money…………… Ishaq Dollar need more money to sumggle Dollars In Panama through Ayaan Ali , He want Pakistani Servants to pay more TAX , so to build more towers in dubai and Panama….. Car Prices in Pakistan are going to increase up and up…. In 2017, A local brand new car will start from 9.25 nine lakh twenty five thousands……New Alto 2016 , 660 cc.. Mehran will no longer be available. Wagon R will be around 11 lakhs 75 thousands. Celerio would be of 13 lacs, carry Dabba will be available from 8 lacs. Honda City will start from 17.50 lacs. Japanese cars will become 50 times costlier. in 2018 , you will get 2013 model Vitz for the price of 14 lacs. CARS PRICES ARE GONNA INCREASE BY A HUGE MARGIN BY THE END OF 2017 or IN 2018. CHEAP OLD FX, CORONA, DATSUN AND JEEPS WILL BECOME POPULAR , A NEW BUSINESS OF THIRD PARTY PARTS FOR VINTAGE CARS WILL BE ON BOOM… Pakistan WILL NOT RISE BUT FULL DEEPER AND DEEPER IN PROGRESS RATE THAN INDIA.. YOU CAN SEE ALIVE EXAMPLES OF DEHLI AIRPORT vs. ISLAMABAD (NEW) AIRPORT.. WHAT THE HELL HAPPENED WITH THAT PROJECT and all in loss……………. PAKISTANI PEOPLE IT IS THE TIME TO REFORM……. LOAD SHEDDING PROBLEM WILL NOT BE A RESOLVED…… IN SHORT , CARS WILL BECOME EXPENSIVE not cheap…………GOVERNMENT HAS PREPARED A BIG HELL FOR THE ILLITERATE PEOPLE OF PAKISTAN……… GOvernment will do the same as they did with MUMTAZ QADRI………………. Pakistan will be taken up by CHINA , INDIA and US by 2027.
A Quite Valid & Thinkable Point Indeed!!!
I am not Quite sure but Most Probably on One Imported car they earn more than a Percentage of Cut on a Local Junk Cart Oh Sorry! I mean Mehran!! 😛 (Correct me on Profit If i am wrong!), In A real case, A 660cc JDM is of 400,000 & almost 380,000 is paid in form of Duty & Taxes! Still It’s way wayy Better than a Local Engine Junky Cart like mehran & Super Narrow Range & HEFTY Priced Local Cars,
A friend of Mine Bought Mehran EuRoo2, & That Poor guy spent almost a Month on going to Workshops for Fixing it’s Sh*t Up!
The topic should be “Car Manufacturers forced government to open import cars for a fair competition to relax consumer which caused 12Bn losses”