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.
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.
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.