New, used car imports surge to $244m

Published April 28, 2022
Imported vehicles are parked at the Karachi Port for clearance.
—Fahim Siddiqi / White Star
Imported vehicles are parked at the Karachi Port for clearance. —Fahim Siddiqi / White Star

KARACHI: A massive increase in car imports has opened a debate in the auto market whether the arrival of used cars is again on the rise or it is due to the import of 12,000 units of a Chinese SUV by a new entrant.

As per the figures of the Pakistan Bureau of Statistics (PBS), the import of cars in completely built-up (CBU) form swelled by 50 per cent to $244 million in July-March 2021-22 from $163m in the same period last fiscal year. Import of cars witnessed a whopping jump of 158pc in FY21 to $256m from $99m in FY20.

All eyes are on MG vehicles, whose imports have touched 12,000 units. The company has celebrated 10,000 unit imports through a media campaign recently.

The Federal Board of Revenue (FBR) in 2021, after opening an enquiry against the Lahore-based company for under-invoicing of vehicles, cleared the issue by saying that the case was false.

However, Khawja Asif of the Pakistan Muslim League-N recently raised the issue of MG vehicle imports in the Public Accounts Committee (PAC), which called a meeting on a single point agenda. The PAC had directed the FBR to probe the matter thoroughly and submit a report within 30 days.

An official at MG Motor said the total imports relating to parts and accessories and CBU is 3pc of the country’s total import bill. The import of completely and semi-knocked down kits by assemblers accounts for 86pc of this 3pc share, with the rest going to the import of new and used cars.

He claimed that used cars accounted for 90pc of the total import bill of $244m in 9MFY22.

He said 22,000 used cars had landed in Pakistan under various schemes in 2021, to which the government was not ready to respond.

“MG Motors has not received a manufacturing licence since it applied in September 2021,” he said, adding the company intends to start local assembly after getting the licence. The total investment in MG assembly is $100m.

He said officials of the Engineering Development Board are reviewing the Phase I site in Lahore, while the Phase II site is under construction.

He said the MG investment of $100m is being targeted even after the conclusion of the case by FBR. A lobby is working against Chinese investments in Pakistan with the sole purpose of discouraging/alienating growth in Pakistan through Chinese support.

He said CBU vehicles are also being imported into Pakistan by other automotive players at a cost and freight much lower than MG HS, even after the global freight increase, but no such allegation or investigation has been initiated against them.

Used cars under different duty regimes have been imported into Pakistan without any warranty or after-sales service, which is a blatant misuse of the gift scheme, transfer of residence and personal baggage. He said the commercial import of a brand new vehicle with after-sales support and warranty is being targeted even after paying all applicable duties and taxes, he said.

The MG official said the company has redefined the vehicle specification and safety trend, forcing the existing automotive players to offer better safety specs for example an existing automotive brand had to offer six airbags in its new model change.

He said all the SUVs like Toyota Rush, Prince Glory, Proton, Changan have been imported and cleared at declared values, whereas only the value of MG vehicles has been enhanced and extra duties and taxes up to Rs1.1 billion have been recovered from the importer of MG vehicles.

Published in Dawn, April 28th, 2022

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