LAHORE - The federal government’s 100 per cent duty relaxation failed to bring down the prices of imported hybrid cars, as the rate of used cars, both hybrid as well as non-hybrid, have jumped by over 27 per cent in just one year.
According to market sources, despite 100% exemption of all duties and taxes on used hybrid cars of up to 1,200cc, 50% exemption of up to 1800cc and 75% exemption of up to 2,500cc, the prices of 1300cc 3-year old Honda Insight Hybrid has jumped by 27% to Rs1,900,000 from its Jan 2013 rate of around Rs1,500,000. The price of 3-year old 1800cc Toyota Prius has increased by 26% from Rs1,900,000 to Rs2,400,000.  As compared to the prices of used imported vehicles, the price of locally produced Suzuki Swift DLX increased from Rs1,251,000 in January 2013 to Rs1,282,000 in December 2013, an increase of only 2.5%. Price of Corolla GLI version increased from Rs1,669,000 to Rs1,729,000, an increase of 3.6%, whereas price of Honda City increased by 3.5%, from Rs1,494,000 to Rs1,548,000.
Similarly, prices of non-hybrid used vehicles also increased significantly, although they continue to enjoy the same highly concessional duty structure. Used 3-year old Toyota Vitz, which was previously available for Rs1,200,000, is now being sold at Rs1,450,000, an increase of 21%. Prices of 3 year old Daihatsu Mira increased from Rs800,000 in Jan 2013 to Rs1,000,000 in Dec 2013.
The industry representatives have asked the government to take action against auto dealers’ mafia for their illegal activities causing damage to the local auto industry on the one hand by importing thousands of used cars illegally and on the other hand hoodwinking innocent customers by selling them old vehicles at exorbitant rates.
The Pakistan Association of Automotive Parts and Accessories Manufacturers chairman, Usman Malik, criticizing the government’s decision of releasing illegally imported 900 cars by just penalizing them with nominal surcharge, said that such decisions have always encouraged used car importers to continue their criminal activities at the cost of domestic industry and national interests.
Usman Malik said that the cash-starved government’s irrational move of allowing this junkyard to be dumped in the country will destroy the industry and if this practice goes on, the importers will never abide by the law, knowing that they can get away by paying nominal surcharges.
Senior Vice Chairman Aslam Rayaz said that government is losing $4475 to $7,337 on import of every used car. The duty rates for used cars were fixed in USD through SRO 577/2005 was back in 2005 which are extremely low.
Aslam Rayaz said that the duty rates fixed in SRO 577 for up to 800cc cars are $4,400 as compared to duty & taxes on import under normal regime of $11,392. With the depreciation allowance of 36% duty and taxes on cars up to 800cc under SRO 577 coming to $2,816 as compared to duty & taxes under normal regime of $7,291, a loss of $4,475 is inflicted to the national exchequer on import of every car up to 800cc. Similarly, the government is losing $7,337 on 1000cc, $6420 on 1300cc, $6,879 on 1500cc, and $5,653 on import of 1800cc used car.