Used cars import costs auto vendors Rs 25 billion

LAHORE: The automotive vending industry has suffered an estimated loss of around Rs25 billion, as local production of cars and LCV’s have declined by 44 percent owing to huge import of used cars in Pakistan.

Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has expressed its concern on the continuous dumping of used cars into Pakistan. During the last six months, over 33,000 used cars that are older then five years have been shipped into Pakistan under the guise of facilitating overseas Pakistanis.

Chairman PAAPAM Syed Nabeel Hashmi stated that the situation is getting out of control as local car manufacturing industry has started to get hurt. Used cars are mostly those vehicles that have been repaired or stolen. Having large variants of models coming into Pakistan will surely also entail huge expenditure of foreign exchange on spare parts imports.

The worst part is that every vehicle imported is also a lost opportunity for our economy to create employment. We are estimating a loss of over 30,000 jobs that could have been created.

During the month of December 2012 approximately 6,500 used vehicles has been imported while the number in January 2012 might be 4,000.

The January figures are indeed surprising as local production of cars and LCV’s have dived to 7,500 which means that 44 percent of Pakistan’s January vehicle demand has been lost to imports. On an average we are calculating a net loss of Rs25 billion sales.

Chairman PAAPAM called for the immediate rescinding of SRO 577(I) 2005 or update of its US$ based values which are out dated and have created an un realistic window for import of these used vehicles. Further giving customs a discretion to further reduce applicable duties by up to 60 percent have literally made imports of used cars free into Pakistan. Which double digit interest rates, unprecedented exchange rate depreciation and unavailability of gas and electricity the Government of Pakistan must intervene to ensure that local engineering units do not shut down.

Munir K. Bana, Vice Chairman added that the permission granted for import of used cars has back fired.

Now precious foreign exchange has to be wasted on import of auto parts for these used vehicles. Instead of giving attention to the core issue of curtailing inflationary trend engulfing resources and endangering national integrity the GOP is allowing import of each and every thing into Pakistan to jeopardize local industry.

Mr. Bana further said that the best way of reducing car prices is to increase level of localization. He emphasized on implementation of Auto Industry Development program (AIDP) in letter and spirit to achieve the target.

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