“No More Import of CBU Cars” – Shaukat Tarin
So many things are wrong with the Pakistani automobile industry. And one of those things is the import of (Completely Built Units) CBU vehicles. The auto companies in Pakistan, especially the new entrants, are importing thousands of CBU vehicles and causing billions of dollars in account deficit to the government. What that means is that our country is spending more on imports than it is receiving on exports.
The Minister of Finance of Pakistan, Mr Shaukat Tarin, recently had a talk with the President of Samaa TV & leading journalist Mr Nadeem Malik, where he said that the government is banning the import of CBU vehicles for six to nine months and keeping a check on other ‘frivolous’ imports.
Government to stop import of completely built up vehicles (CBUs), check ‘frivolous’ imports.
Current Account Deficit $1.6 billion/month @shaukat_tarin https://t.co/9eSJH2wbi6 pic.twitter.com/c8W0mP2Iou— Nadeem Malik 🇵🇰 (@nadeemmalik) November 23, 2021
CBU Imports
A total of 10,513 new vehicles (passenger cars, 4×4, vans, pickups, 2-wheelers and buses) were imported in Pakistan in Fiscal Year 2021, compared to 1,680 units in FY20, 3,716 units in FY19 and 7,424 units in FY18.
In the first two months of the current fiscal year 2022, car companies imported CBU vehicles worth $103 million, 118% up compared to $47 million in the same period last year.
CKD/SKD Imports
In the first two months of the current fiscal year 2022, car companies imported CKD/SKD kits worth $369 million for local assembly of their vehicles worth $369 million. Compared to $117 million in the same period last year, the growth factor is 214%.
Why did the government snap?
When new auto companies entered the Pakistani market, the government allowed them to import 100 CBU units per variant with tax relaxation. This was to encourage these new companies to test their products in the market and then invest in the local production of those cars.
What the companies did instead was they imported the first batch of 100 units or so and got a welcoming response from the buyers. But then, they started taking more bookings for CBUs and lost track of working on the local production.
A year later, these car companies have sold thousands of imported CBU vehicles and are still selling more and more without the local production in sight. And the government has had enough of this charade.