Surge in Used Car Imports Hits Local Automakers

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Local car manufacturers are facing challenges in attracting buyers despite offering price reductions, registration incentives, and auto financing options. Meanwhile, the market for imported used cars is flourishing.

According to H.M. Shahzad, Chairman of the All Pakistan Motor Dealers Association (APMDA), around 28,000 used cars were imported during the July-May period of FY24, marking a significant increase from the 14,000-15,000 units imported in the entire FY23. He predicts that the total imports will reach 35,000 units by the end of the fiscal year, resulting in approximately $400 million in customs duty and taxes collected by the government.

Shahzad attributes the rise in used car imports to political and economic stability compared to the uncertainties of the previous year. He highlights that 80% of the imported cars fall in the 660-1,000cc category, citing their fuel efficiency as a key factor driving demand.

While the import of completely built-up (CBU) units, including new cars, has also surged according to data from the Pakistan Bureau of Statistics, Shahzad emphasizes the need to expand the policy for importing used cars. He suggests increasing the allowable age of vehicles under transfer of residence, gift, and baggage schemes to seven years for cars and SUVs, which would help reduce the burden of expensive imported petrol.

Shahzad believes that the competition from imported used cars will compel local assemblers to further reduce prices and curb black marketing practices. This sentiment is supported by the decline in sales of locally assembled cars and the continuous contraction of auto financing, particularly for new vehicles, due to high-interest rates.

In contrast, the demand for financing for used cars remains active, highlighting the affordability and attractiveness of imported used vehicles amidst challenging market conditions for locally assembled cars.

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