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Higher car prices: Pama, dealers indulge in blame game

August 23, 2011

Pama spokesman said allowing import of used vehicles commercially will prove a death warrant for the local industry, resulting in loss of jobs of two million workers employed in auto and allied industries. - File photo

KARACHI, Aug 23: The local market is flooded with used imported cars at rates, too, high for their models, Pakistan Automotive Manufacturers Association (Pama) alleged.

A Pama spokesman said a used imported 4-5 years old Suzuki Alto with 650cc engine is being sold in the local market at Rs700,000-750,000 where as a customer can buy brand new locally made alto with 1,000 cc engine for the same amount.

Similarly, Toyota Vitz costs a little over Rs1.1 million while its parallel version Suzuki Swift is marketed by local manufacturer at the same price.

The luxury cars are being imported eating up precious foreign exchange. The spokesman said the government has full information in this regard and should take steps to stop this practice.

He alleged that now the importers’ lobby is pressing the government to allow import of 10-year-old used cars. Considered as junk in the world, these cars would increase pollution levels in the country and would burden the consumers in long run due to non-availability of spare parts and poor after sales service.

Allowing import of used vehicles commercially will prove a death warrant for the local industry, resulting in loss of jobs of two million workers employed in auto and allied industries, the Pama said.

Even if restricted import under change of residence is allowed, the duty rates are so high and environmental conditions are so stringent that import of used cars become unviable for true owners as well, he added.

The spokesman said that allowing import of five years old cars is already causing embarrassment to the government which allowed the same to make cheaper cars available to consumers but most of them are priced at the rates equal to new locally made cars.

The Pama spokesman said used car dealers’ lobby does not contribute to job creation or technology transfer and evades taxes on large scale besides under-invoicing and fleecing the customers.

Meanwhile, All Pakistan Motor Dealers Association (APMDA) chairman H. M. Shahzad informed Finance Minister Dr Hafeez Shaikh that the consumers were facing problems due to sharp increase in prices of locally assembled cars in the last two years.

He said the assemblers were fleecing consumers by taking 100 per cent advance payment at the time of booking of a car and deliver cars in few months. As a result, black marketers start charging premium from buyers.

He urged the government to check the deletion level pledged by the assemblers as it has not been achieved despite passage of many years.

He said in 2005-06, the import of used vehicles was permitted after a long gap of 12 years. This was subsequently restricted to import of used vehicles of three years old only in different schemes. As a result local assemblers acquired a monopoly on prices and supply.

He urged the government to allow commercial import of used vehicles up to 10 years of age in addition to existing schemes like transfer of residence, baggage and gift schemes.