According to latest data report by Statistics Bureau of Pakistan (SBP), the vehicles imports have seen a massive hike of 83% in 11 months of current fiscal year. The report stated that import of CKD (Completely Knocked Down)/SKD (Semi Knocked Down) stands at $2.180billion in 11MFY21 against $1.431million in 11MFY20, showing an increase of 86.72%. Meanwhile, the imports of CBU (Completely Build Up) units were $336.941million in 11MFY21 compared to $185.861million, showing a hike of 81.29%.
The major reason is increasing number of car manufacturers in Pakistan, along with new generations launch. The companies are importing the CBU units to test their to-be-launched products on local roads and market. The companies get 50% reduction on import duties on first 100 CBU units. Meanwhile, some companies are importing CKD units of for recently-launched cars, i.e., Changan Alsvin and Proton SAGA, while others are importing to-be-launched vehicles like Hyundai Sonata and Honda City.
Tax Reductions for Small Cars:
This news is surfaced as the federal government has reduced taxes on locally assembled small cars to boost the buying power of middle-class section of the society. In Federal Budget 2021-22, the government reduces Sales Tax on cars under 850cc to 12.5% from 17%, and ended Federal Excise Duty (FED). After this reduction, the prices of cars like Prince Pearl and Suzuki Alto will reduce from Rs70,000 to Rs1,13,000.
APMDA Demand:
On the other hand, All Pakistan Motor Dealers Association (APMDA) has asked the government to revise the upcoming auto policy to increase used cars import. Earlier this month, Chairman of APDMA, H. M. Shehzad, sent a letter to the Ministry of Finance (MoF).
Shehzad started the letter by highlighting how the local automakers have been exploiting the market. He said that the existing have had the opportunity to reap the benefits of restrictions on the import of used vehicles, and now the new entrants have joined the club. Now, all automakers are increasing car prices and defrauding the consumers with the ON MONEY practice.
The Solution
The letter went on to propose a solution for the above-mentioned malpractices of local assemblers. Since all this mess is because there’s no competition in the market, the Chairman APDMA proposed that commercial import of used cars should be allowed. He requested that the auto policy be extended for low cost and economy car import for middle-class consumers.
