Used Commercial Vehicle Import Proposal Rejected
Earlier this month, a meeting was held by the Engineering Development Board (EDB) on the proposal to allow the commercial import of used cars in Pakistan. The meeting was held with automobile dealers who showed their inclination towards commercial import of used cars. Previously, EDB had vehemently opposed concessions given to the importers of used cars.
According to the EDB, the commercial import of used cars can lead to detrimental effects on local automobile manufacturers, spare parts manufacturers and the new entrants under the Automotive Development Policy (ADP) 2016-2021. Based on this rationale, the Ministry of Industries and Production has turned down the proposal favouring the commercial import of used cars.
Analysis
The Automotive Development Policy (ADP) 2016-2021 has attracted a huge amount of foreign direct investment in Pakistan. This would lead to an increased degree of competition in the auto sector and will also be conducive for job creation in the sector. Moreover, a few new entrants have also decided to exports automobiles from Pakistan. In an era of increasing imports and decreasing exports, this will be a positive step forward.
Allowing the commercial import of used cars will put the hard work of Automotive Development Policy (ADP) 2016-2021 in jeopardy. It will also go against the basic premise on which the policy was launched, which was to strengthen the local auto sector and boost its production. Furthermore, existing automobile manufacturers are increasing their production capacity to cater to increasing market demand. If that demand is met with imported vehicles, it will serve as a deterrent for future investors seeking to invest in Pakistani auto sector.
However, the importers of used cars are still rallying to ask for concessions from the government as the 2019-2020 budget is about to be presented.
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