Cut in used cars age limit to spur growth

By: Our Staff Reporter | November 24, 2012

LAHORE - The auto industry representatives have welcomed the ECC decision to bring down age limit of used imported cars from five to three years to support the local industry, but importers have rejected the move. Manufacturers said that this decision would go a long way in stimulating the growth of the domestic industry and a flagging economy. Deputy Prime Minister Pervaiz Elahi, deserves appreciation for accepting the auto industrys plea and moving a proposal for reduction in the age limit of used car imports, said PAAPAM Chairman Munir Bana. He said that senior minister firmly believed that jobs of 2 million workers of the auto industry must be saved. At Paapams last annual function, he personally made a commitment to raise his voice against imports of used cars in the interest of domestic industry. Appreciating Pervaiz Elahis services, vice chairman Usman Malik said that the deputy prime minister had also reduced general sales tax on tractors from 17 per cent to 5 per cent last year, helping revive the tractor industry and its allied auto parts manufacturing (APM) units. Syed Nabeel Hashmi thanked the deputy prime minister and also called upon the industry as a whole to respond to the govt gesture immediately by further enhancing and speeding up production and local content. He said that the auto industry was facing a steep decline in production and car assemblers and APMs had retrenched thousands of workers because of continuing imports of used cars. He said that countries like India, Thailand, Malaysia and even Japan protect their local industry by imposing heavy duties to discourage imports. Usman Malik added that in order to protect the employment of 2 million persons directly/ indirectly associated with the automotive industry and to encourage foreign investment, it was essential to provide fair protection to local industry. PAMA chairman Parvez Ghias said that local industry welcomes decision as it was critical for survival of industry. He said that during the period 2001-2007, with the help of stable policies of the government, the automobile industry went through a period of tremendous expansion, with investments of over Rs40 billion and volumes going up by over 500 per cent. Unfortunately, due to import of used vehicles and other adverse policy factors, our industry is now suffering from excess capacity, he added. All-Pakistan Motor Dealers Association Chairman HM Shehzad terms it monopoly of car assemblers, as reduction in the age limit of used cars, coupled with an increase in prices and black-marketing, will make them more strong. He said that the government would lose over Rs30 billion in terms of revenue from used car imports. Link: http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/24Nov-2012/cut-in-used-cars-age-limit-to-spur-growth

Auto industry invited to discuss import policy

Published: September 14, 2012

It is estimated that 55,000 used vehicles have been imported in the previous year. LAHORE: The Secretary Ministry of Industries Shafqat Naghmi has invited the local auto industry, next week, to separately discuss the issue of the import of used cars. Naghmi took the decision after the association of local car manufacturers and auto vendors lodged protests against the government for not taking them into confidence as they did with the All Pakistan Motor Dealers Association (APMDA). Since, both the Pakistan Automobile Manufacturers Association (Pama) and the Pakistan Association of Auto Parts and Accessories Manufacturers Association (Paapam) refused to sit with the APDMA in the meeting scheduled for September 13, 2012, saying that the APDMA is a trade body not a manufacturer, thus the secretary has invited them for a separate meeting next week. The APDMA, however, met Naghmi and apprised him on the potential which used cars posses in Pakistan. They asked for a further lenient import policy and revising the depreciation limit of imports to 10 years. Earlier, in separate letters to the ministry, both the Pama and Paapam questioned the wisdom of a trade body indulged in imports as the ministry should serve the interests of the local manufacturers. Paapam Chairman Nabeel Hashmi said that the APDMA is not registered with the Directorate General of Trade Organisations (DGTO) as a representative body of traders. Hashmi said that most of the 80,000 cars that entered the Pakistani market in the last two years were shipped from Japan where the total number of Pakistanis residing is only 10,000.

No importer in Pakistan is allowed to import used cars commercially. This facility is only available to overseas Pakistanis through transfer of resident and gift scheme, he said. It is worth mentioning the local auto Industry has seen its worst two months in terms of sales and it has lead to suspension of production by local industry. Also, it is estimated that 55,000 used vehicles have been imported in the previous year. Published in The Express Tribune, September 14th, 2012. Link: http://tribune.com.pk/story/436215/auto-industry-invited-to-discuss-import-policy/

Auto industry suffering due to car import policy

Published in The Daily Times, Wednesday, August 15, 2012 Staff Report

KARACHI: The Pakistans auto industry has become a leading industrial sector that has attained growth in the large-scale manufacturing sector. The high economic and job multiplier effect of this industry and its strong forward and backward linkages in upstream and downstream industries make the auto industry a key player in the national economy. But for the last four years, economic development in Pakistan has declined, mainly because of implementation of inappropriate policies by the government, without the consent of the stakeholders. This includes the car import policy as well. The car import policy, which was introduced to benefit the local consumers is in fact benefiting the local auto dealer only. Under the guise of this policy, the auto dealers, with the blessings of certain corrupt parliamentarians are importing brand new cars and other vehicles, and these used vehicles in official import figures hold a big share. The share of used cars in the official July-March 20112012 import figures is more than 90 percent. If the government allows this to continue, the country would soon end up with a pile of old, used cars. Most used cars in Pakistan are being sold either at par or at a higher price than the market price of similar newly produced cars. Total import of used vehicles may hit 50,000 units by the end of the current fiscal year. Meanwhile, local manufacturers are continuously increasing prices of the local cars, saying that it has become difficult for the common man to even buy a small car. On the other hand, the auto industry has shown its dismay over the indifferent attitude of the government towards the dilemma of the local automobile industry that is ready to compete with brand new imported cars, but not against five-year-old cars that are considered junk even in the countries from where they are imported. The local manufacturers stance is different than the dealers, since they say the government opened the import of used cars with the intent of providing small-end users with low-priced units. This argument does not hold water as the local

consumers are forced to pay exorbitant prices for five-year-old models, most of which have become obsolete and their spare parts are not available, rendering the vehicles even more expensive to maintain. The auto sector has assumed that duty on used cars of 800cc is Rs 158,400 against Rs 199,650 on a similar brand new locally made car. On 1000cc cars, the duty on imported used cars is Rs 198,000, while on same category locally produced brand new cars it is Rs 313, 500. The difference in duties further increases in case of 1300cc and above cars, where the importers of used cars pay Rs 396,000 per car against Rs 627,000 paid by local car manufacturers on a new car of the same engine size. Despite the major concern of continuous depreciation of Pak rupee against Japanese yen and dollar has slowed down, the foremost challenges are still ahead regarding revision of Auto Industry Development Programme, governments consideration to reduce tariff on imported vehicles and duty benefit to new entrants. In this fiscal year the growing loss to the government on import of used cars is likely to reach Rs 5.63 billion considering the relaxations allowed. The expected break-up of imported used cars will be 8,000 cars of 800cc, 18,000 units of 1000cc and 14,000 units of 1300cc and above. Used car import has also resulted in job loss of 30,000 to Pakistans auto vending industry, closure of 25 percent vendors, besides polluting Pakistans roads and causing a loss of over Rs 5.63 billion to government revenues. The Pakistan Association of Auto Parts and Accessories Manufacturers fear further loss of jobs in the vending industry due to shift in government policy, especially when it allowed used cars import with relaxation in depreciation allowance. The government needs to check imports of used cars, as all the badly damaged, unfit, scrapped and abandoned vehicles in Japan, are finding their way into Pakistan. All aspects need to be inspected by the government, before giving relaxation, especially the depreciation allowance which should be maintained at 1.0 percent on imported used cars. Link: http://www.dailytimes.com.pk/default.asp?page=2012%5C08%5C15%5Cstory_15-82012_pg5_6