KARACHI: The import bill of parts and accessories used in assembling vehicles locally rose 8.5 per cent year-on-year to $841 million in the last fiscal year, even higher than $537m spent on imports of completely built-up (CBU) units.

According to the Pakistan Bureau of Statistics (PBS), imports of completely knocked-down (CKD) and semi-knocked-down (SKD) kits was $775m in the fiscal year 2014-15 and that of CBU was $406m.

Rising imports of auto parts suggest better sales of locally assembled vehicles in the future as the industry imports kits and accessories based on advance booking orders and increased demand for vehicles.

Except for tractors, the auto sector has performed well with rising sales of cars, heavy vehicles, bikes, light commercial vehicle (LCVs), etc.

At the same time, however, imports of used vehicles also skyrocketed in the fiscal year 2015-16, much to the chagrin of the local car industry.

According to figures provided by local vendors, imports of used vehicles surged 67pc to 53,603 in 2015-16 from 32,074 units a year ago. In contrast, the PBS figures showed a jump of 33pc in imports.

Higher import bill of parts and accessories suggests that the localisation targets given by the government have not been met. But the industry claims to have achieved local content of up to 70pc in case of cars and LCVs, 90pc in motorcycles and tractors and 45pc in heavy vehicles.

Sources said the industry is importing hi-tech parts not manufactured in Pakistan while auto-parts makers are also importing raw material.

Aamir Allawala, a former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), believed imports of used cars utilised 2.5 times more foreign exchange per vehicle as compared to locally produced cars. This was due to higher production of local parts, he said.

“Moreover, imports of used cars have a negative impact on job creation in the industrial sector, he said, adding that the auto industry provided direct and indirect jobs to almost three million people — including workers, technicians, engineers and management professionals — compared to around 4,000 jobs created by used-car importers under the schemes meant for overseas Pakistani nationals.

“The government should realise that imports of used cars is the biggest deterrent to investment in auto manufacturing, either by new assemblers for setting up auto plants, by existing assemblers for expanding their plants or by vendors to produce parts that are yet to be localised in the country,” he said.

He said the amount spent on importing used vehicles in 2015-16 was enough to set up two new plants of the size of Honda Atlas Cars Pakistan, which rolls out 25,000 Civic and City vehicles per year.

“The import of used cars will be the single biggest factor for failure of the newly announced auto policy for the period 2016-21,” he feared.

Based on the import figures of $841m for CKD/SKDs and $537m for CBU units in FY16, a total of 216,000 units were assembled, including cars and LCVs, the former Paapam chairman said. In contrast, imports of used cars were more than 50,000 units in same fiscal year. “It means foreign exchange utilisation per unit comes to $3,890 and for CBU import it was $10,020 per unit,” he said.

Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Shaikh said the PBS data also has a category of parts and accessories imports, which rose to $337m in 2015-16 from $320m a year earlier.

The combined imports of SKD/CKD units and parts and accessories (after market) come to $1.17 billion in 2015-16 compared to $1.09bn in 2014-15.

He said hi-tech parts were not produced in Pakistan despite rising sales, especially of motorcycles. Rising imports of parts suggested local vendors were unable to meet demand and the industry was buying it from the commercial importers, he said.

“There is a need to form an independent audit team which can check the actual localisation levels achieved by the industry in various auto segments,” he said, adding that despite high sales of bikes, nobody from Pakistan had made serious effort to set up a carburettor plant. “We are still an assembly-based industry as major parts come from abroad.”

Published in Dawn, July 24th, 2016