Introduction

In recent times, Pakistan’s local car industry has faced significant challenges due to rising car prices and policy decisions. One notable trend is the staggering increase in the import of used cars, which has raised alarm bells for the local automotive sector.

The Numbers

684% Surge: During the first half of the fiscal year, Pakistan witnessed a remarkable 684% increase in the import of used cars compared to the same period last year¹².

Categories Affected:

This surge isn’t limited to specific car types. It spans various categories, including:

Economy and Small Low-Segment Cars

Commercial Vehicles

SUVs

Vans

Luxury Vehicles

Factors Driving the Trend

Regulatory Duty Removal: The removal of regulatory duty on used cars up to 1800cc in the federal budget for the fiscal year 2023-24 played a significant role in encouraging imports².

Competitive Pricing:

Imported cars often come with competitive pricing, making them attractive to consumers.

Additional Features: Imported vehicles offer additional features that appeal to buyers, further boosting demand.

Technical Issues and Implications

Quality Control:

Imported used cars may not always meet the same quality standards as locally assembled vehicles. The absence of rigorous quality checks can lead to safety and reliability concerns.

Emission Standards: Imported cars might not comply with Pakistan’s emission standards, contributing to environmental pollution and health risks.

Parts Availability:

Spare parts for imported models can be scarce, affecting maintenance and repair services.

Warranty and After-Sales Support: Imported cars often lack manufacturer warranties and authorized service centers, posing challenges for consumers seeking reliable after-sales support.

Impact on the Local Industry

Challenges for Local Vendors:

The surge in used car imports has negatively impacted local vendors. Abdul Rehman Aizaz, Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), estimates a loss of approximately Rs. 36 billion and potential business closures².

Competition and Innovation: However, this trend also creates healthy competition. Local assemblers are compelled to enhance features in their variants to stay competitive.

Customer Perception:

The perception that imported cars are more reliable and feature-rich has gained ground among local customers.

Balancing Interests

Policymakers face the challenge of balancing the interests of all stakeholders. While used car imports present challenges, they also signify opportunities for growth and innovation.

Sustainable development should be the focus as Pakistan navigates this evolving automotive landscape.