ISLAMABAD: The auto industry has given suggestions to the government to increase the duty and tax imposed on the import of used vehicles and to impose a complete ban on the purchase of vehicles for non-filers in the federal budget of the next financial year 2024-25.
In addition, the auto industry has demanded the government to ensure a transparent mechanism for the import of used vehicles for overseas Pakistanis, whereby overseas Pakistanis are allowed to import vehicles only for their family use. could
Chief Executive of Indus Motors Company talking to the media with the Chairman of Pakistan Auto Parts Manufacturers Association (PAPAM) after meeting with the officials of FBR and Ministry of Commerce and Ministry of Finance regarding the budget proposals for the next financial year. Officer (CEO) Ali Asghar Jamali said that automobile manufacturers and parts manufacturers have given proposals to the government for the federal budget of the next financial year.
By including the proposals of the automakers in the budget, the government will be able to get an additional tax revenue of 60 to 70 billion rupees from the automobile sector in the federal budget of the next financial year. He has expressed hope that the current government will take supportive measures in the budget of the next financial year to bring the local auto industry out of crisis and restore the confidence of investors.
Indus Motors Company Chief Executive Ali Asghar Jamali further said that the local auto industry has requested the federal government to increase duties and taxes on the import of used vehicles in the upcoming budget, in order to stabilize the exchange rate and expected reduction in interest rates. The initial improvement in economic conditions could benefit the local auto industry.
He said that due to the import of used vehicles on a large scale, contrary to the expectations associated with the beginning of the new year, even in the year 2024, there was no better change for the auto industry of Pakistan. He said that it is significant that February 2024 saw an improvement of 28% in vehicle sales and February 2024 sales stood at 7953 units compared to February 2023 sales of 3642 units.
On the other hand, imports of used cars recorded an increase of 711 percent (396 units against 3,213 units) in February alone compared to the same period last year. If this situation continues, the parts supply industry will be forced to shut down its business due to the uncertain business environment while vehicle manufacturing plants have been running at 25-30% capacity for the past several months.
To meet the demand of the auto industry, the heavy investment made by the vendors industry in increasing its production capacity is also not being utilized and is only producing parts for about one lakh units of vehicles. The chairman of PAPAM also said in his recent statement that the local auto industry has invested 2.5 billion dollars while collecting 400 billion rupees in revenue in the national treasury in fiscal year 2022 and providing 2.5 million direct and indirect employment opportunities. Who are in danger due to this crisis situation.
The average monthly import of used vehicles from July 2023 to April 2024 stood at 3068 units, which has adversely affected the business of the local industry. This can result in unemployment and economic losses in taxes. Illicit financial channels continue to be used for foreign payments related to used cars.
On the other hand, the local auto industry uses all legal means to bring parts into the country, which continues to be a major challenge for the local industry. He said that the government should ensure a transparent mechanism for import of used vehicles, whereby overseas Pakistanis can be allowed to import vehicles only for their family use.
He added that the massive import of used vehicles has also damaged the country’s foreign exchange reserves and the depreciation of the rupee along with economic uncertainty has threatened future investment.
He said that the first quarter performance of Toyota’s newly introduced hybrid electric vehicle – Toyota Corolla Cross has been satisfactory. The Toyota Corolla Cross has the highest indigenous component ratio in its category, with over 50 percent indigenous components. He added that around 13 brands are producing a total of more than 40 models locally, with a combined production capacity of 500,000 units per year, but imported used cars pose challenges to the survival of the local auto industry. are creating
Explaining the situation faced by the auto industry, he added that in order to support the local auto industry, the government is requested to rationalize the import tax on imports of used vehicles, so as to revive the local market and encourage local manufacturers. In order to protect the interests and ensure the sustainability of countless jobs, the influx of imported vehicles can be stopped.
