WEB DESK: Local automakers in Pakistan struggle despite price reductions, registration incentives, and auto financing options. Meanwhile, the imported used car market is booming.
Surge in Used Car Imports
H.M. Shahzad, Chairman of the All Pakistan Motor Dealers Association (APMDA), revealed that 28,000 used cars were imported during the July-May period of FY24. This is a significant increase from the 14,000-15,000 units recorded in the entirety of FY23. Shahzad projected that total imports could hit 35,000 units by the fiscal year’s end, generating approximately $400 million in customs duties and other taxes.
Factors Driving the Increase
The surge in used car imports, especially in the 660-1,000cc category, is due to newfound political and economic stability. According to the Pakistan Bureau of Statistics (PBS), the import of completely built-up (CBU) units, including motor cars, increased by 256% to $207 million in July-April FY24, compared to $58 million in the same period the previous fiscal year.
Advocating for Policy Expansion
Shahzad advocated for expanding the policy governing the import of used cars. He proposed increasing the allowable age of vehicles from three to seven years for cars, including hybrids and electrics, and from five to seven years for SUVs and LCVs. He emphasized that importing used cars, particularly in the 660cc-1000cc range, reduces the burden of expensive imported petrol. It also offers significant competition to local assemblers, potentially compelling them to lower prices and curb black marketing practices.
Decline in Local Car Sales
Sales of locally assembled cars dropped sharply by 29% to 62,962 units during the first 10 months of FY24, compared to 88,260 units in the same period the previous fiscal year.
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Auto Financing Trends
Auto financing continued its downward trend for the 22nd consecutive month. It contracted to Rs236 billion in April from Rs239.4 billion in March, according to the State Bank of Pakistan (SBP). Auto financing has declined significantly, shrinking by Rs132 billion from Rs368 billion at the end of June 2022. Dealers noted that despite a high-interest rate of 22%, demand for financing used cars remains strong, overshadowing the appetite for locally assembled new vehicles.
