Auto import bill surges by 194pc in July-December

Published January 26, 2021
Demand for cars and SUVs surged after buyers returned to the market owing to a drop in interest rates. — AFP/File
Demand for cars and SUVs surged after buyers returned to the market owing to a drop in interest rates. — AFP/File

KARACHI: Revival in demand and soaring imports of brand-new cars, sports utility vehicles (SUVs) and pickups by new entrants in the auto sector have pushed up the overall import bill of completely built up (CBU) vehicles by 193.7 per cent to $94 million in the first half of the current fiscal year (1HFY21) from $32m in the same period last year.

Overall imports of these vehicles in FY20 had witnessed a drop of 55pc to $99m owing to the government’s decision of imposing various new rules and regulations to curb used car imports in order to facilitate sale of locally assembled cars and encourage new entrants in the auto sector to achieve their sales targets in a market-friendly environment.

Talking to Dawn, a car assembler said the government had allotted quotas to new entrants for bringing in brand-new completely built-up unit (CBU) cars and other vehicles.

Demand for cars and SUVs surged after buyers returned to the market owing to a drop in interest rates. Along with improved economic indicators, another reason for the spike in auto demand is lifting of vehicles by growers of cash crops who fetched higher prices for the commodities and now have ample liquidity.

The figures of Pakistan Bureau of Statistics (PBS) cover CBU imports of both used and new cars in which 660-1,000cc hold an over 90 per cent share, said Chairman of the All Pakistan Motor Dealers Association (APMDA) H.M. Shahzad.

“High value of brand-new imported cars and SUVs must have caused a big impact on the PBS figures of CBU imports following introduction of imported SUVs and pickups in larger numbers,” he said.

He claimed that 10,000-12,000 used cars, SUVs, pickups etc were imported during July-Dec 2020 which is far lower when compared with overall imports of 18,500 units in FY20, 55,000 units in FY19 and 82,500 units in FY18.

Imports of used vehicles have shrunk after the government’s decision in Jan 2019 that all vehicles in new/used conditions need to be imported either under personal baggage or gift scheme and the duty and taxes would be paid out of foreign exchange arranged by Pakistan nationals themselves or local recipient supported by bank encashment certificate showing conversion of foreign remittance to local currency, the APMDA chairman said.

He expressed unhappiness over with the prevailing trend among some buyers for purchasing high engine power vehicles especially jeeps and SUVs. The middle income and upper-middle income group need smaller cars and for them there is costly locally assembled Suzuki vehicles, Mr Shahzad said.

Handsome money is being spent on importing completely- and semi-knocked down (CKD/SKD) kits for local assembly of cars. According to the PBS figures, imports of CKD/SKD for assembly of local cars have risen by 63pc to $373 million, while “on money” is still going on local cars. High imports of CKD/SKD kits also suggest low localisation in assembly of vehicles by the new and existing entrants, he added.

On the other hand, car assemblers said that they were facing severe supply chain issues due to congestion at foreign ports owing to the Covid-19 pandemic.

An official of the Pak Suzuki Motor Company Limited (PSMCL) said the company has informed buyers regarding the delay in delivery of some car models due to pandemic-related interruptions and delay in global supply chains of imported parts and supplies.

The company said it was continuously in touch with its suppliers and shipping lines to mitigate supply-chain related interruptions.

Published in Dawn, January 26th, 2021

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