Here is another update translating how the Pakistan’s local car industry is losing its strength in the face of stark increase in car prices and not-well thought policies. As per the reports, in recent times, Pakistan has observed a staggering increase in the import of used cars, clocking at 684% in the first half of first fiscal year against the same period last year.
In conjunction with competitive pricing, additional features come as another factor which pushes the customer towards imported cars compared to locally assembled vehicles.
The Details
Breaking down the data, it’s evident that there has been a significant rise in the import of various categories of used cars, including economy and small low-segment cars, commercial vehicles, SUV, vans, and even luxury vehicles. This surge can be attributed to the removal of regulatory duty on used cars up to 1800cc in the federal budget for the fiscal year 2023-24.
However, while this move aimed to revitalize the automotive sector, it has also started posing challenge for the local car industry. Abdul Rehman Aizaz, Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), highlighted the detrimental impacts on local vendors, estimating a loss of approximately Rs. 36 billion and potential closure of business.
Experts note that the perception of imported cars being more reliable and feature-rich is gaining ground among local customers, contributing to the increasing demand.
This trend of importing used cars creates healthy competition in the automotive market, prompting local assemblers to enhance features in their variants. In a rapidly developing technological world, where customer preferences hold significant sway, the inclination towards imported cars, particularly among residents of first-tier cities, is notable.
While the surge in used car imports presents challenges for the local auto industry and government revenue, it also signifies opportunities for growth and innovation. Balancing the interests of all stakeholders while ensuring sustainable development should be the focus of policymakers in navigating this evolving landscape.
All these local car assemblers companies and parts vendors have had decades to set up their businesses. Especially in the case of the old three who are the biggest whiners and the biggest proponents of the blame game against imports. Simple honest observation here, after decades doing business in Pakistan, how much exports have they achieved? If they are all importing CKD kits and raw materials to assemble cars here and make some parts here. How much exports have they done to off-set the cost of their imports?
A very important point here is, people gladly pay taxes on those imports. Imports also generate a lot of tax revenue for the nation as well; or has PW forgotten its own news reporting.
*https://www.pakwheels.com/blog/restrictions-on-car-imports-cost-fbr-rs-22-billion-in-revenue/
This rhetoric against imports by our local car companies is like the current tiktok ban under discussion in the US. Companies like Meta, Microsoft, Google and others are accusing TikTok of data mining and illegal data gathering and selling of that data to the Chinese government and others. Actions for which they have no evidence at all currently. Yet all the companies involved in this campaign (Meta, MS, Google etc.) are all doing the very same thing themselves! And ironically, in their case there is even clear evidence that they actually do all that!
Similarly, in the case of local assemblers vs. imports, it is not about doing the right thing for the nation. It is about securing the market. If it was about doing the right thing and giving a return on investment to the nation, our local companies would have entered the export market long ago. Till now they are only waiting for LCs to open so they can spend the nation’s now very depleted dollar reserves to import their parts and sell locally only.
Clear case of “pot calling the kettle black”!