Lower duties on completely built-up vehicles risk local vendors, auto experts say
Reducing duties on completely built-up (CBU) vehicles could divert market demand away from locally assembled vehicles and hurt business volumes for domestic auto-parts vendors, auto experts told Business Recorder , urging the government to safeguard the local vendor industry. Auto expert Aamir Allawala said unlike simpler industries like tiles, ceramic, and cement, Pakistan’s auto sector is a…
Removing tariffs on completely built-up (CBU) vehicles could take away market demand from domestically assembled cars and negatively impact the business of local auto-parts vendors, according to auto experts. Aamir Allawala, an auto expert, explained that Pakistan's auto industry is a complex ecosystem consisting of three sectors: raw materials, over 1,200 parts manufacturing vendors, and more than 100 vehicle assemblers.
He noted that domestic automotive production faces high utility, interest, and taxation costs, and low production scales. Therefore, each sector requires a protective tariff differential, like the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) suggested. They proposed maintaining a minimum 50% tariff protection on CBU vehicle imports and a 40% tariff on locally manufactured parts.
Allawala warned that the proposed 15% peak tariff reduction in the National Tariff Policy (NTP) could harm local parts manufacturing and damage business volumes for local parts vendors. He highlighted that Pakistan's auto policies from 2016 to 2026 were assembly-centric, offering low tariffs on CKA parts. Other experts pointed out that Pakistan's auto industry faces external barriers like security concerns, weak free trade agreements, rising production costs, and lack of state incentives, which hinder its growth potential.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
