Local automakers voice concerns as imports of used cars surge in Sept

In September, a surge in the import of used cars occurred following the easing of regulations, prompting local automotive manufacturers to express their concerns. Despite the imports, importers argue that the move would introduce competition in the auto sector. Following a decline in imports due to the government's abolition of the Personal Baggage Scheme and restrictions on the used car schemes for overseas Pakistanis, imports have begun to rise again.

In September, 2,276 used vehicles were imported under the Gift Scheme, a significant increase from 48 vehicles in May. The increase in imports began from June, with 843 vehicles imported, including 806 under the Gift Scheme. The number of imports reached 1,938 in July, with 1,876 under the Gift Scheme, and 1,445 in August, followed by the 2,276 imports in September.

A senior executive from the auto industry pointed out that the reduction in duties on completely built units (CBUs) by 20-25 percent in the 2026-27 budget has decreased the import cost. The executive also mentioned that the one-year restriction on transfer of ownership is not being implemented in certain cities, leading to a resurgence in the used car business.

However, auto parts vendors expressed their apprehensions, stating that the imports of 2,276 used vehicles would result in the loss of Rs3.4 billion from local parts production, which generates jobs and operates within the documented economy. Abdul Rehman Aizaz, chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), criticized the situation, arguing that it is unfair that while the auto policy is reducing import duties on new cars, it encourages the import of used cars.

He further warned of a market dominated by imported new and used vehicles, with no industrial activity. Importers, on the other hand, contend that Pakistan requires a competitive economy and that importing used cars is entirely legal under government regulations. They also highlighted the demand for used cars in Pakistan, noting that new Chinese entrants have yet to make their presence felt, and Japanese car assemblers are not yet prepared for the competitive environment.

The FPCCI member endorsed the government's recent changes in the vehicle import regime, predicting continued growth in used car imports, including under the Gift Scheme and commercial imports. The Engineering Development Board (EDB) recently relaxed the criteria for imports of used vehicles, removing the minimum capital requirement and allowing tax-registered individuals and firms, even those not registered with the Securities and Exchange Commission of Pakistan (SECP), to import vehicles.

The pre- and post-shipment inspection will now be conducted through the Pakistan Standards and Quality Control Authority (PSQCA) rather than the EDB. However, the PSQCA's chief executive officer clarified that inspections are not directly carried out by the authority but through registered inspection agencies, of which only two local inspection agents have been registered so far.