LAHORE - The used cars’ import is likely to exceed 40,000 mark by the end of this fiscal year with expected break-up of 8,000 cars of 800cc, 18,000 units of 1,000cc and 14,000 units of 1,300cc and above. Consequently, huge loss of employment in auto industry is likely to enhance because of government’s policy of relaxation in depreciation allowance in used cars import, auto industry experts said.

As per industry sources data, since Dec 2010 to Jan 2012 more than 35,000 used cars have been imported in the country. Besides this, they are causing a loss of over Rs 5.63b to government this fiscal in terms of relaxations allowed pertaining depreciation allowance. Moreover, industry experts said that dealers who engaged in import of new cars are now investing in importing used cars and trading of new cars, which provided healthy competition to the local industry, has almost been eliminated by dint of import of old used cars.

As per data, during Jan-Dec 2008 period total 4,140 new cars and 7,931 used cars were imported in the country. During Jan-Dec 2009, some 1,842 new and 3,142 used cars entered Pakistani market. During Jan-Dec 2010, the country imported 2,428 new and 3,406 used cars. But, the situation changed dramatically during Jan-Dec 2011 period when only 2,019 new cars were imported against 30,615 used cars.

‘The duty on used car of 800cc is Rs 158,400 against Rs 199,650 on a similar brand of new locally made car. For 1000cc cars the duty on imported used cars is Rs 198,000 which is Rs 313,500 on the same category of locally produced brand new car,’ sources said, adding that this difference in duties is much with 1300cc (and above) cars because the importers of used cars pay Rs 396,000/unit duty against Rs 627,000/unit paid by local car manufacturers on a new car of the same category.

Local auto industry therefore is appalled by the indifferent attitude of the government towards their plight because they are not to compete against five year old junk cars. ‘The government’s intention was to provide small end users with low priced cars, but almost all the imported used cars are being sold either at par or in some cases a little lower/higher than the market price of similar new cars produced in Pakistan.

Experts termed it an injustice to the consumer who is forced to pay exorbitant prices for five year old models, most of which have become obsolete and their spare parts are not available globally. However, sources termed the plea of some critics that the delivery time of locally produced cars is very high a thing that lacks conviction. First, they added, the government needs to revisit its policy on registration of cars. Second, if it is made mandatory that the car booked with the manufacturer by a person cannot be transferred before six months, it would shorten the delivery time.