MULTAN,June 3rd: President of Multan Chamber of Commerce & Industry (MCCI) Malik Asrar Ahmed Awan has said that the ban on import of used vehicles that are more than 3 years old be continued by the government in the upcoming financial year in order to protect OEMs from suffering huge losses on their investment in plants and infrastructures and wastage of foreign exchange.In a press statement MCCI President said that a free hand in allowing the import of used cars will cause an immense damage to the local industry and will result in the drain of valuable foreign exchange and dumping of junk cars in the country as such cars are at the end of their productive life, or are not compatible with Pakistani conditions.He said this will also result in layoffs on a massive scale, not only for the in-house work force at the automotive plants, but also for the large number of vendors, to whom certain automotive parts are outsourced for manufacturing. As a result of reducing depreciation rate from 2 per cent to 1 per cent, the used car imports slowed to 6,524 units for the year (2008-09) compared 13,145 units for 2007-08.He said that the industry demand for the locally manufactured Passenger Cars (PC) and Light Commercial Vehicles (LCV) grew by 78 per cent to 37,222 units in the third quarter ended March 2010, as compared to 20,856 units sold for the same period last year. The overall sales increased by 34 per cent to 98,738 units versus 73,910 units sold in the corresponding period to March 2009.“There are reports that used car importers usually resort to malpractices using false documentation to import a large number of used cars into the country”, Awan said and added that the current policies on used cars in Pakistan are still extremely liberal when compared to India, Thailand and other countries and are often misused by importers under transfer of baggage scheme.MCCI president suggested that government should prepare long term consistent policies to encourage other manufacturers to invest in the country and duties on cars with higher engine capacities (above 1800 cc) should be rationalised so that consumers have a choice to import these vehicles. He said that Pakistan has got the lowest tariff rate on used vehicle compared to India and Thailand. Even today used vehicles up-to 3 years old are allowed into the country with a depreciation allowance of 25 per cent. There is no product support for such vehicles and ultimately the customer suffers. Government should have policies which assist local industry as it creates jobs, Technology transfer, increase investment, etc.


The market size would be around 300,000 units in the coming 2 years despite the AIDP vision of around 500,000 units to be produced by the auto assemblers by the year 2012. These assumptions are based on current volumes of 2008/09. Malik ASrar Ahmed Awan said that the domestic auto industry needs government stable and consistent policies coupled with low duty on the high-tech parts that cannot be localised due to non-availability of technology and current low volume to achieve economies of scale, industry, he said. He said there is a dire need for a stable policy to allow the industry to plan effectively for future models and expansions and the ban on import of used vehicles to remain intact. A free hand in allowing the import of used cars would cause an immense damage to the local industry and would result in the drain of valuable foreign exchange and dumping of junk cars in the country, said Malik Asrar Ahmed Awan President of MCCI.He said this fallout would also aggravate the local scenario of economic uncertainty and the local OEMs would suffer huge losses on their investment in plants and infrastructures for automobile manufacturing. This would also result in layoffs on a massive scale, not only for the in-house work force at the automotive plants, but also for the large number of vendors, to whom certain automotive parts are outsourced for manufacturing. Inflationary pressures on account of rise in input costs and continued depreciation of the rupee severely eroded their profitability, while the disruption in part supplies caused by power outages posed a huge challenge in maintaining regular supplies and ramp up of the production to meet the rising customer demand,he concluded