LAHORE - Experts question the rationale behind import of used cars while Government is striving to attract foreign investors in the upcoming auto industry development plan.

The policy makers are working at cross purpose as on one hand; Govt envisions European car makers to enter the Pakistani market and on the contrary liberal import of used cars, exploiting baggage and gift schemes, is denting the local industry and national exchequer. European car makers, keen to invest in Pakistan categorically asked government about stance and future policy pertaining import of used cars.

According to the data of used cars imports continue to thrive unabated as between January and December 2015, a total of 34765 passenger cars were imported, including 25000 small cars, 4036 SUVs and 2456 pickup/vans. The total imports of used vehicles last year were 41257 units. On the other hand, PSMC, excluding Taxi scheme, produced around 85,000 vehicles in 2015.

Almost 5,000 units of Hybrids competing with Civic and Grande were imported in 2015, while over 4,000 SUVs were imported affecting the locally produced Fortuner, of which around 700 units were sold during the said period.

The illegal trade going on rampantly under the guise of providing small segment cars, rips off consumers, giving maximum benefits to traders who charge premium on cars imported before the levy of 1% duty.

Experts believe that Govt will have to change the mindset where automotive manufacturing is discouraged and trade is encouraged due to which not only industry is being hurt but consumers are at the losing end due to higher prices, non availability of spares, after sales service and technical support.

The three segments of domestic auto industry namely small cars and minivans, high-end sedans, and SUVs are being hurt by the rampant misuse of concessionary schemes of importing used cars meant solely to facilitate overseas Pakistanis.

‘Availability of this market to local industry would have enabled the company to utilize its capacity and to develop confidence to make future investments in capacity creation and new models introduction,’ said former chairman PAAPAM Aamir Allawala. ‘The government should be aware of the damage being caused to prospects of foreign investment, labour associated with local and allied industries and investment made by producers and vendors,’ said Aamir, adding that in 2015 the domestic auto sector has led the LSM growth in the country and therefore needs to be encouraged.

He said the industry requests the government to increase applicable duty by 20% on the import of small cars, below 1000cc, as these cars are under-taxed.

‘The government should reduce age limit from 5 years to 3 years for minivans, and increase applicable duty by 20% on the import of minivans, below 1000cc, as these cars are under-taxed,’ suggested Aamir.

Similarly, he added, the government should reduce the duty rebate from 50% to 0% on the import of Hybrid vehicles considering that drop in oil prices which has eliminated the need to encourage hybrids.

Moreover, the government should reduce the allowable age limit from 5 years to 3 years for SUVs. These measures will increase our market penetration and capacity utilization, as is the case in the HCV sector.

, which is going through unprecedented growth as a result of measures to control the import of used HCVs,’ reasoned Aamir.