The All Pakistan Motor Dealers Association (APMDA) has doubled its efforts to promote its proposal for Trade Policy 2012-13, stating that used vehicles up to 10-year-old should be allowed for commercial import, sources said. They believe they can easily double car imports from the present 55,000 to around 100,000 if the government increases the age limit. If the government allows this, it could be highly detrimental to the domestic auto industry, manufacturers said.
In the recent past APMDA was of the view that the import of used cars would be a ready answer to providing affordable cars to local consumers. They think that this will not only provide an environment of healthy competition but will ensure a steady supply of quality and reasonably priced cars. However, APMDA is now emphasising particularly on the import of luxury cars for the benefit of a certain few, as it is quite apparent that the imported luxury cars are obviously out of reach of an average car buyer.
According to Pakistan Association of Automotive Parts and Accessories Manufacturers, the government is bent on turning the country into a junk yard of used vehicles at the cost of the local auto sector which is the backbone of industry and has invested billions of rupees over the last decade. The auto industry has also been a source of gainful direct and indirect employment for millions of people.PAAPAM is also of the opinion that by giving Customs Department discretionary powers to further reduces applicable duties by up to 60 per cent as depreciation has literally allowed free import of used cars into Pakistan.
The government suffered a loss of over Rs14 billion in the last 12 months in the shape of customs duty by allowing import of used cars under special regime (SRO 577), and over 50,000 vehicles were shipped into Pakistan during this period. Besides, the automotive parts vending industry has lost an estimated Rs7 billion in sales.Import of used cars is not only hurting the Original Equipment Manufacturers (OEMs), but is also affecting the associated parts industry and they may soon be out of business.
According to PAAPAM, the domestic auto parts vending industry has also borne a loss of Rs 27 billion so far. A locally-made car, acquires parts from the local vendors valued up to Rs300,000-400,000 per car; the imported 50,000 vehicles have deprived local vendors of this business.If the situation persists, the industry will have no choice but to shut down, which will create pubic unrest, as a huge number of people would lose jobs. The import of thousands of used vehicles will further reduce the demand for locally produced cars and reluctantly in thousands of lost jobs.
Manufacturers said that allowing the commercial import of used vehicles is grossly unfair to the consumer and is a death knell for the local industry which has invested billions of rupees over the past decade and is a source of employment for millions. As the government persists in looking the other way, the local auto market continues to be flooded with high-priced imported junk cars.
Regrettably, the government’s ignorance is encouraging corrupt elements to fleece consumers which may damage the local auto industry in an irreparable manner.With the Trade Policy round the corner, any negative step could prove to be detrimental to the domestic auto industry comprising OMEs and vendors as it can seriously lead to factory closures and unemployment. There has already been a declining trend in the market share of the auto industry over last year due to a 46 per cent decrease in auto sales.
courtesy: The Nation