The Pakistan Automotive Manufacturers Association (PAMA) has recently intensified its call for regulatory measures aimed at curbing the influx of used imported vehicles, particularly those below the 1300 CC category. This move is part of a broader effort to rejuvenate the struggling local automotive industry, which has faced significant challenges in recent years.
PAMA’s Proposal and Rationale
In a letter addressed to the Prime Minister and federal policymakers, PAMA Secretary General Abdul Waheed Khan outlined the association’s proposal to impose a 15% regulatory duty on used imported vehicles below the 1300 CC category. Khan emphasized that such a measure is essential to protect local manufacturers and assemblers from unfair competition and to promote the objectives set forth in the Auto Policy 2012-2026.
“The import of used cars has surged by 600% in recent years, while local production and sales have plummeted to unprecedented lows,” stated Khan. He underscored the urgency of updating the existing regulatory framework, noting that outdated tax structures have resulted in substantial revenue losses for the government.
Current Scenario and Challenges
Despite the implementation of a 15% regulatory duty on used vehicles above the 1300 CC category starting July 1, 2024, a similar levy for vehicles below this capacity has been notably absent. This omission has allowed a significant portion of imported used cars, approximately 62% according to customs import data from January to May 2024, to enter the market without additional duties.
Auto sector analysts and consumers alike have voiced concerns over the dominance of imported used cars in the market, attributing this trend to the lack of affordable and high-quality options produced locally. The preference for imported vehicles has been further exacerbated by practices such as the imposition of “own-money” premiums by local dealers, exploiting consumer demand amidst market shortages.
Impact on the Local Industry and Consumers
The local automotive industry’s challenges extend beyond competition from imported vehicles. Economic factors such as inflation, currency depreciation, and high interest rates have collectively dampened consumer purchasing power, leading to sluggish sales and financial strain for industry stakeholders.
Muhammad Sabir Hussain, a prominent auto sector analyst, criticized the industry’s reluctance to innovate and produce cost-effective vehicles. “Instead of focusing on improving product offerings and competitiveness, there is a reliance on government interventions to curb imports,” remarked Hussain. He emphasized the need for the local industry to step up and deliver vehicles that meet consumer expectations in terms of affordability and quality.
Way Forward and Government’s Role
Looking ahead, stakeholders urge the government to adopt a balanced approach that supports both local manufacturing capabilities and consumer interests. This includes revisiting import policies to ensure fair competition, promoting maximum localization of the auto industry, and fostering an environment conducive to innovation and investment.
“The solution lies in empowering the local industry to produce vehicles that not only meet domestic demand but also position Pakistan as a regional hub for automotive manufacturing,” Khan asserted. He called for strategic policy adjustments that align with broader economic goals while safeguarding the interests of consumers and industry players alike.
Conclusion
As Pakistan navigates the complexities of revitalizing its automotive sector, the debate over regulatory duties on imported vehicles underscores critical issues of economic policy, industrial competitiveness, and consumer welfare. The ongoing dialogue between PAMA, government officials, analysts, and consumers reflects a shared commitment to finding sustainable solutions that foster growth, innovation, and prosperity within the local automotive industry.
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