KARACHI: The government will likely impose various import restrictions on second-hand cars in the upcoming budget to revive the ailing sales of locally assembled vehicles.

The auto sector stakeholders have remained highly busy in the last 15-20 days, holding meetings with the relevant ministries and Prime Minister Shehbaz Sharif, followed by extensive media advertisement to build up a strong case against thriving used car imports and their negative impact on the sale of locally assembled vehicles, vendors, and local employment.

Industry people believe that the average monthly import of 3,085 used cars, or 30,679 units, during the first 10 months (July-April) of FY24, compared to 4,701 units in FY23, hit sales of locally assembled vehicles.

When Indus Motor Company Chief Executive Ali Asghar Jamali was asked to confirm the possibility of curbs on used car imports in the FY25 Budget, he said, “Yes! That’s what they (the government) have committed to.”

No new incentives in sight for electric vehicles

He said, “We have a single-point agenda. The government should completely stop the illegal arrival of used cars, which has not created any jobs in the country and instead threatened jobs in the manufacturing sector.”

He said the industry was hopeful as Prime Minister Shehbaz Sharif, in a recent meeting with the auto assemblers, had agreed to support the local industry.

He said illegal hawala and hundi channels are used to send valuable foreign exchanges to import second-hand vehicles. In contrast, the local auto industry uses the legal route for importing all parts into the country.

“There is a need to have sufficient processes in place to allow used vehicles to be imported into the country, only for the use of overseas Pakistanis’ families,” he emphasised.

All Pakistan Motor Dealers Association (APMDA) Chairman H.M. Shahzad said the market is abuzz with rumours that the

regulatory duty (RD) on imported vehicles of 1,800cc and above will be increased to 90pc from the 70pc.

“There is nothing in the air about any ban or curb on “low engine power used car imports” in the upcoming budget,” he said, claiming that instead the government may put extra pressure and keep a vigil on the assemblers to boost their localisation, Made-in-Pakistan vehicle and exports on which the assemblers and their vendors have failed in the last 40 years.

“We have not held any meeting with the finance, production and commerce ministries on used car import issues, but the association and these relevant ministries have been in touch with each other on various issues, including used car imports,” Shahzad claimed.

“There is no need for import of vehicles if the local assemblers provide affordable vehicles with all specification and quality on par with imported vehicles,” he said, adding that used cars are successfully covering up the demand and supply gap as costly locally produced vehicles have gone out of reach of many people.

Electric vehicles

EV and petrol bike dealer and expert, Mohammad Sabir Sheikh said “I do not think that the government will make any changes in the already existing EV policy for motorcycles.”

Currently, there is one per cent general sales tax, 10pc import duty on battery, controller and motor while body parts are imported at 45pc.

He said around 30 plants are assembling two wheeler EVs in Pakistan whose prices hover between Rs 200,000-500,000 based on 600-3,000 Watt motor.

Sabir said that high prices of EV bikes are still beyond the reach of many people as shrinking buying power coupled with rising utility bills have restricted many people to buy EV and petrol driven two wheelers.

A Chinese four-wheeler assembler said, “Some kind of regulatory duty hike to strictly control used car imports is on the cards, and used car importers/dealers will face difficulties in importing used vehicles.”

He said, “The CKD policy on elective vehicles may also remain unchanged.

Nothing special is coming in EV assembly policy.” However, two or three assemblers have been trying hard to roll out locally assembled EV vehicles.

Published in Dawn, June 9th, 2024