The auto industry demands immediate government support

The auto industry demands immediate government support

The local automotive industry has urged the new government to immediately implement measures to support the sector and restore investor confidence in Pakistan.

“Currently, as many as 13 local brands collectively produce more than 40 models with a total capacity of 500,000 units per year,” said Abdul Rehman Aizaz, Chairman of the Pakistan Association of Spare Parts & Accessories Manufacturers (PAAPAM).

However, he said, the significant increase in used car imports poses a serious challenge to the sustainability of the local automotive industry, which has invested about $2.5 billion and contributed around Rs400 billion in taxes in FY2022 alone.

He regretted that this surge in used car imports continues to affect the scale and potential of the local car industry.

“In FY2022, the local automotive industry contributes about Rs250 billion in local purchase value and generates about 2.5 million direct and indirect jobs in the country,” he added. “The average import of 3,000 used cars per month is now pushing the growth of the local industry into negative territory (about 40%),” explained Aizaz.

He further warned that the large influx of used cars in the country would eventually cause local businesses to close, resulting in unemployment and economic losses (in terms of taxes). “It also affects the country’s foreign reserves (economic loss of the dollar), which leads to the depreciation of the PKR,” he said.

It is worth mentioning that in the last nine months of the financial year 2023-24, a total of 27,852 units were imported, compared to 3,924 units imported during the same period in FY2022-23, marking an increase of 610%.

According to the data, the imports consisted of 8,626 units in the Economy Segment, 6,491 units in the Small Low Segment, 5,864 SUVs, and 5,563 units from the economy pick-up and MiniVans category. In the Other Vehicles category, 1,308 units in the Small Pickup, Luxury, Bus, Truck and 1 Ton segments have been imported in the last nine months of the current financial year so far.