Import of used cars surges to 28,000 units

KARACHI: Local automakers are struggling to attract buyers with price cuts, registration discounts and auto financing, while the imported used car market has shown strong performance.

All Pakistan Motor Dealers Association (APMDA) Chairman H.M. Shahzad claimed that 28,000 used cars were imported during the July-May period of FY24, compared to 14,000-15,000 units in the entire FY23.

“Total imports will reach up to 35,000 units by the end of the current fiscal year,” he said, claiming that the government would collect around $400 million in customs duty and other taxes from the overall import of used cars in the outgoing fiscal year.

“Out of total imports of used cars, the share of 660-1,000cc is 80pc,” he said, attributing rising used car imports to political and economic stability from uncertainty last year.

According to data from the Pakistan Bureau of Statistics (PBS), the import of completely built-up (CBU) units (motor cars) swelled 256pc to $207 million in July-April FY24 from $58m in the same period last fiscal year.

“In the above PBS data, imports of new cars are also included,” he said.

Shahzad said the policy for importing used cars under the transfer of residence, gift, and baggage schemes should be expanded by increasing the allowable age of vehicles from three to seven years for cars, including hybrids and electrics, and from five to seven years for SUVs and LCVs.

He claimed that the duties of all these vehicles are paid in foreign exchange.

He said the import of 80pc used cars (660cc-1000cc) also reduces the burden of expensive imported petrol, as low-engine-power vehicles run 22-24km per litre.

The APMDA chief said a huge foreign exchange was being spent for importing completely and semi-knocked down kits by the assemblers.

He said importing used cars would provide considerable competition to the local assemblers, compelling them to cut prices further and stop the menace of black marketing in the form of “on-money or premium.”

The sales of locally assembled cars plunged 29pc to 62,962 units during 10MFY24 from 88,260 units in the same period last fiscal year.

Besides, auto financing contracted for the 22nd consecutive month in April to Rs236bn from Rs239.4bn in March.

According to data issued by the State Bank of Pakistan (SBP), auto financing declined by Rs132bn from Rs368bn at the end of June 2022.

Dealers said that the demand for financing for used cars remained active instead of locally assembled new vehicles amid a high-interest rate of 22pc.