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Used car imports claim bigger chunk in auto sales

KARACHI: The share of used imported cars and light commercial vehicles (LCVs) in the auto market was 19 per cent in 2016, up from 14pc in 2013.

Last year saw the arrival of 46,500 used cars and commercial vehicles while the local industry rolled out 203,500 vehicles.

When the PML-N government came to power in 2013, the import of used cars and LCVs was just 22,450 units and the industry assembled 139,000 units.

In 2015, the import of used vehicles stood at 43,400 units while the local industry produced 247,500 units partly because of 50,000 units of Suzuki Bolan and Ravi purchased by the Punjab government in 2015-16. As a result, the share of imported vehicles in 2015 remained 15pc.

Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) former chairman Aamir Allawala said that although the total market size has grown, there are both positive and negative aspects of the import of used vehicles.

Based on the arrival of 46,500 used vehicles in 2016, the average value of localised parts lost per vehicle comes to Rs350,000. The lost sale of locally produced parts is estimated at Rs16 billion.

The share of hatchback 660cc cars and Eco vans was 19,605 units and 10,385 units, respectively, in 2016 import figures. Merits of used car imports include additional revenues to the government, availability of choices for car buyers, immediate delivery with no lead time and continuous pressure that keeps a check on the local industry.

Demerits of used car imports include payments remitted through hawala, undocumented sale activity, misuse of various import schemes for overseas Pakistanis, negative effect on auto-sector investments, no manufacturing job creation, lack of after-sale service, lack of spare parts’ availability, cost problems and low resale value, the former Paapam chairman said.

Local car manufacturing involves three million jobs in assembly and vending units and provides an avenue for massive long-term investment by global auto giants. As many as 2,000 companies produce up to 70pc local parts, with a completely documented supply chain.

In contrast, locally produced vehicles offer a small volume per model and limited choices for consumers. Prices of local small cars are higher than ones produced in India, with capacity limitations resulting in the delay in vehicle delivery. Local small cars also lack features like automatic transmission and airbags.

Paapam has never recommended a complete ban on used car imports. However, it has suggested that duties be increased on used car imports over a period of three years. Duties on used cars below 1,000cc should be increased 30pc while the allowable age for minivans (below 1,500cc) and sport utility vehicles (SUVs) should be reverted to three years. The duty rebate of 50pc of used hybrid cars should be abolished, he said.

Courtesy : Dawn News

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