Increasing Used Car Imports Are Pressuring Pakistan’s Auto Industry: PAMA

Pakistan’s automotive industry is facing a serious surge in imports of used vehicles, following the government’s decision to eliminate protective taxes. This move has led to a dramatic increase in the importation of old cars, intensifying competition for domestic manufacturers who are already grappling with reduced output and sales. The Director General of the Pakistan Automotive Manufacturers Association (PAMA) said the removal of regulatory duties and additional customs duties previously imposed on used vehicles has put local vehicles at a competitive disadvantage. Despite this, there has been no adjustment to taxation policies to address this issue. He pointed out that the surge in imported vehicles is a result of traders exploiting loopholes in policies, particularly with overseas Pakistanis buying vehicles for bulk imports. The popularity of SUVs among Pakistani consumers has contributed to a significant increase in imports, with a staggering rise in numbers compared to previous years. During the current fiscal year, used vehicle imports jumped 641 percent compared to the previous year. This sudden surge poses a significant challenge to policymakers and industry stakeholders alike. DG PAMA emphasized that local manufacturers now find themselves at a disadvantage due to unfair competition from imported used cars. This not only undermines their efforts but also jeopardizes the livelihoods of many workers employed in the sector. He underscored the importance of supporting the local automotive industry, which brings foreign investment, technology transfer, job creation, and significant revenue to the government. He urged the government to ensure predictability and policy certainty to sustain the growth of the local industry and achieve the objectives outlined in the Automotive Industry Development and Export Plan 2021-2026.