The auto industry has called on the federal government to impose a 25 percent regulatory duty on imported small used cars below 1,300cc, while maintaining a 15 percent regulatory duty on vehicles above 1,300cc.
The rampant illegal import of used vehicles into Pakistan has led to significant job losses in the automobile industry and worsened the misuse of schemes intended for overseas Pakistanis, according to a letter from the Pakistan Association of Automotive Parts & Accessories Manufacturers to the Prime Minister on Tuesday. “Our Association, representing over 300 auto parts manufacturers, had hoped that the Federal Budget 2024-25 would include strong measures to curb this illegal trade, which also serves as a conduit for black money. We are deeply disappointed by the Budget announcement regarding the import of used vehicles. The Finance Act has imposed a regulatory duty of 15% on imported used vehicles, but only for those above 1,300cc engine capacity,” the association stated.
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“This is very disheartening for the 400,000 Pakistanis directly employed by the auto parts industry. Customs import data from January to May 2024 clearly shows that 62% of all used cars imported into Pakistan are below 1,300cc,” the letter explained.
The association also proposed the following measures to provide a level playing field for the domestic industry, similar to policies in other automobile-producing countries:
- Currently, the value of a used vehicle is depreciated by 1% per month from its manufacturing date for duty calculation purposes. This depreciation rate should be reduced to 0.5% per month.
- 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.
