Automobile industry hit a new low when Pakistan Automobiles Assemblers Dealer Association (PAMADA) reported that government’s used car scheme has damaged local market and the situation is getting out of hand. As reported by The Nation; Chairman PAMADA said:
The government should probe the biggest impediment to new investment, misuse of baggage and gift schemes for imports of used cars. This misuse is also resulting in huge losses to national kitty
He further said that we feel insecure about government’s current policy as illegal cars are being sold under the very nose of custom and FBR department. This gift of government has become a nuisance for us and must be dealt with. Smugglers are using the scheme to sell their cars in the market without paying any penny; government should stop this scheme right away and give compensation to the losses, which the local manufacturers have gone through with.
He further elaborated:
Approximately 54,000 units were imported in 2015-16 as compared to the 30,000 units in the coresponding period of the last year
Considering the stats, the situation is quite concerning and alarming for the local manufacturers and assemblers to work, where the market is all crammed up with used legal and illegal second-hand cars; easy to buy and sell.
The scheme was introduced to boost local car market but it did the opposite and makes it even worse, over the last ten years, more than 300,000 used cars have been imported, capturing a large share of our local automobile market. This is one of the many reasons why many car manufacturers’ plants like Hyundai, Nissan, Fiat etc. are on the brink of closure [while some are already closed].
In this situation, the Government needs to re-evaluate their policy according to the deteriorating market conditions. Because not only is this policy affecting the local auto industry but is also going to reflect on Government’s revenue generation; as under SRO-577, which includes with-holding taxes, sales taxes and custom duties on the used import cars for some arbitrary and un-known reasons. This activity has managed to generate a grey economy of PKR 80 billion in 2015 alone, which is not good for local manufacturers as well as for the country’s economy.