WEB DESK: The auto industry in Pakistan has called on the federal government to impose a 25 percent regulatory duty on imported small used cars below 1,300cc while maintaining the existing 15 percent duty on vehicles above 1,300cc.
In a letter to the Prime Minister on Tuesday, the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) highlighted the adverse effects of rampant and illegal imports of used vehicles. The association noted that this practice has led to significant job losses in the automobile industry and has been misusing schemes intended for overseas Pakistanis, thereby undermining the local industry.
“Our Association, representing over 300 auto parts manufacturers, was very hopeful that the Federal Budget 2024-25 would contain strong measures to discourage this illegal trade, which also serves as a parking lot for black money. We are seriously dismayed by the Budget announcement regarding the import of used vehicles. The Finance Act has imposed a regulatory duty of 15 per cent on imported used vehicles, but only on those above 1,300cc engine capacity,” PAAPAM stated.
“This is very disappointing for the 400,000 Pakistanis directly employed by the auto parts industry. Customs import data from January to May 2024 clearly demonstrates that 62 per cent of all used cars imported into Pakistan are below 1,300cc,” the letter explained.
PAAPAM also proposed additional measures to level the playing field for the domestic industry, in line with practices in other automobile-producing countries:
1. Depreciation rate adjustment: Currently, the value of a used vehicle is depreciated at 1% per month from its manufacturing date for duty calculation. PAAPAM suggests reducing this depreciation rate to 0.5% per month.
2. Registration conditions: Vehicles imported under the Gift, Baggage, or Transfer of Residence schemes for overseas Pakistanis should first be registered in the name of the importer. Subsequent transfers should only be allowed after a period of three years.
These measures, PAAPAM argues, are essential to protect the local auto industry and prevent the misuse of import schemes, ensuring fair competition and sustainable growth for the sector.
