KARACHI: The 196 per cent hike in imports of completely built-up (CBU) cars to $94 million during the first half of the current fiscal year (1HFY21) has raised doubts in the auto sector if the import of new vehicles by recent market entrants is on the rise or the arrival of used vehicles is increasing.
Talking to Dawn, auto sector stakeholders offered different views, with some expressing fears that the facility of importing 100 units under concessionary duty by new entrants is being misused.
The Pakistan Automotive Manufacturers Association (PAMA) has also sought clarity from the Engineering Development Board (EDB) on incentives provided to the new entrants.
All Pakistan Motor Dealers Association (APMDA) chairman H.M. Shahzad, while quoting the import statistics of Model Customs Collectorate of Appraisement, said a total 16,126 units of new and used vehicles arrived in July-Dec 2020.
Used cars up to 1,000cc held the largest share with 6,840 units followed by 2,838 units from 1,301cc to 1,500cc. From 1,601cc to 1,800cc, imports of used cars stood at 698 units followed by 425 jeeps. Import of vans under personal baggage stood at 502 units and 36 units in 1HFY21.
Doubts raised if concessionary duty facility being misused
He said that under the new vehicle category, 2,532 units of cars up to 1,000cc were imported, followed by 1,520 units under 1,301-1,500cc, 132 units in 1,601-1,800cc and 42 jeeps (4x4), taking total imports to 4,236 units. New vans and pickups imports stood at 310 and 22 units in July-December 2020-21.Mr Shahzad said the number of new vehicles’ import from July-Dec 2020 has surpassed total fiscal year data of new vehicles during FY19 and FY20.
Under the Auto Policy 2016-21, new entrants are allowed to import 100 units under a concessionary duty regime to first test the market and observe consumers’ reaction.
He said the government should take notice of new entrants’ activities as they are importing more vehicles rather than focusing on local assembly while huge foreign exchange was draining out. Due to a huge demand, they also hold huge booking orders in their hand, he claimed.
Existing assemblers are also playing havoc with the prices, he said, adding that the government did not take notice of over Rs1.1m price hike in Suzuki APV imported vehicle by Pak Suzuki Motor Company Limited.
While disagreeing over revival of used car imports from July to December 2020, he said old shipments of vehicles, which were stuck in Japan due to pandemic and containers issues, are now arriving.
He said imports of used vehicles are still very low keeping in view total imports in the last two years.
As per the data of Pakistan Bureau of Statistics data, overall imports of vehicles during 2019-20 registered a steep fall of 55 per cent to $99m from $222m in 2018-19.
Mr Shahzad, while urging the government to either allow commercial imports of used cars or enhance the age limit to five years from three years on used car imports, said the local industry was minting money by earning huge interest from the consumers’ money deposited in banks on advance booking of cars which are being delivered in four to five months.
The APMDA chairman said imports of used vehicles had been under pressure following the government’s decision in Jan 2019 that all vehicles in new/used conditions must 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.
CEO Regal Automobiles Sohail Usman said his company had imported 100 units each of Glory SUV 1.5 and Glory 1.8 as per incentives under auto development policy 2016-2021, while the company had imported around 20 Prince 800cc as “we are focusing more on the local assembly.”
“Our company has rolled out more 2,500 Prince vehicles in less than one and a half years and we have also assembled 350 Glory SUVs after its launching in December 2020,” he added.
Mr Usman said the plant has the capacity to assemble 5,000 vehicles in a single eight hours shift but currently it is operating at 3,500-4,000 units.
“I am definitely concerned over soaring imports of brand new vehicles which will cause foreign exchange loss,” he added.
Sources in the Master Motors said the company had imported less than 50 units of Alsvin vehicle in CBU form before launching its local assembly.
They said other new entrants did not even utilise their quota of 100 units as the price was unfeasible even after a 50pc cut in import duty.
Auto makers are concerned that one of the new entrants continues to import vehicles in larger numbers against the quota, besides selling and booking the vehicles with no indication of setting up any plant till June.
An assembler said all new products are supposed to be launched by June.
Meanwhile, PAMA said these new entrants are also reportedly submitting revised business plans for the new models. This, submission of revised business plan, by those who have already attained commercial production, may circumvent the incentive period that may end up being more than five or three years.
Perhaps the new entrants refereed here are those who have not yet finalised their plans and have not yet in commercial production, the Association added.
Published in Dawn, February 14th, 2021