Car imports surge 35pc to $218.4m

Published May 22, 2015
Around 33,000 used cars landed in Pakistan during July-April 2014-15 compared to 22,220 in the entire FY14. -Reuters/File
Around 33,000 used cars landed in Pakistan during July-April 2014-15 compared to 22,220 in the entire FY14. -Reuters/File

KARACHI: The import of cars (over 90 per cent of them used) jumped by 35pc to $218.4 million during the first 10 months of this fiscal year compared to $161m a year earlier.

All Pakistan Motor Dealers Association (APMDA) Chairman H.M. Shahzad said importers of used cars are in a hurry to accumulate vehicles ahead of upcoming budget, fearing any negative decision that could push up the cost of imports.

Around 33,000 used cars landed in Pakistan during July-April 2014-15 compared to 22,220 in the entire FY14. The share of 660cc cars was 70-80pc, followed by 10pc of used hybrid vehicles.

He said the government should encourage imports of used 660cc vehicles as they consume less petrol.

The import of completely knocked down (CKD) and semi-knocked down kits (SKD) grew by 38pc to $391m in July-April 2014-15 compared to $283.4m in the same period last fiscal year.

Triggered by orders for Punjab Taxi Scheme for Suzuki Bolan and Suzuki Ravi followed by flourishing sales of new Toyota Corolla, the overall sales of locally produced vehicles rose to 120,942 units from 97,232 units a year ago. The increase in sales seems to nullify the assemblers’ stance that their sales were badly hit by growing imports of used cars.

Mr Shahzad urged the government to allow commercial import of up to 10-year-old vehicles as “it will help it generate more revenues”. He said the government should impose a fixed rate of duty on the import of used vehicles of engine capacity of above 1,800cc, as is the policy for used vehicles of below 1,800cc.

He also urged the government to withdraw advance income tax on registration and transfer of vehicles, which he said is being charged in Punjab and Sindh only.

Meanwhile, Pakistan Institute of Trade and Development (PITAD), which is affiliated with the Ministry of Commerce, has in a recent study pointed out flaws in Pakistan’s used car import regime while comparing it with India, Thailand and Indonesia.

In Pakistan the values of different cars are arbitrarily fixed by the Customs department against the global practice of applying actual current value of new cars. Duties charged in Pakistan are $4,800 for cars of up to 800cc; $6,000 for 801-1,000cc; $12,000 for 1,001-1,300cc; $16,900 for cars 1,301-1,500cc; $20,500 for 1,501-1,600cc; and $25,400 for $1,601-1,800cc.

Depreciation is calculated at the rate of one per cent per month (maximum up to 36pc), from the date of first registration of vehicles abroad to the date of its entry into Pakistan. Excise and sales tax are included in the fixed tariff.

There are no non-tariff barriers employed by the government on used vehicles. For vehicles having engine power above 1,800cc, a luxury tax is imposed at the rate of 50pc ad valorem. Used vehicles are only allowed to facilitate expatriate Pakistanis under Transfer of Residence (TR) and Gift and Baggage schemes. The vehicles imported through these schemes are meant for use of expatriate and their family.

The study said that India uses a tariff of 100pc on imported vehicles and there is no customs duty discount on the import of used cars. Cars older than three years cannot be imported into India. Commercial import of used vehicles is also not allowed.

India also uses different non-tariff barriers. For instance, only right-hand-drive vehicles are allowed to be imported into the country and speedometer has to be in km/hour.

Tariff applied by Thailand is of 80pc on import of used vehicles. Customs duty discount is not applicable and the country does not apply an age limit on imported used vehicles. Thailand also does not allow import of used cars for commercial purposes.

Published in Dawn, May 22nd, 2015

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