Following the government’s decision to remove the regulatory duty (RD) on imported luxury vehicles, local automakers in Pakistan have expressed deep concern.
local automakers in Pakistan
According to the Pakistan Automotive Manufacturers Association (PAMA), this move could result in significant losses for the national auto industry, potentially resulting in a 25% decline in market share.
According to PAMA, the increase in luxury vehicle imports could reach 3,000 vehicles per month, or 36,000 units per year.
PAMA highlights the negative effects of this decision on the industry in a letter to the Federal Board of Revenue (FBR).
According to the association, the government’s action indirectly impedes the growth of the native auto industry while allowing the import of luxury items, including completely built-up (CBU) vehicles, at reduced tax rates. As a result, automakers face an uneven playing field.
PAMA emphasizes that Pakistan is already experiencing a severe foreign exchange crisis, which is posing significant challenges in the trade and industrial sectors due to a lack of imported goods and raw materials.
With the removal of the RD, Pakistan’s entire auto industry is now on the verge of shutting down.
This impending crisis threatens the government’s revenue and raises concerns about social unrest caused by job losses.
The loss of locally manufactured vehicles will have a significant impact on national parts manufacturers.
According to PAMA, the shift to imported vehicles will result in financial losses ranging from Rs 800,000 to Rs 1,500,000 per unit for parts suppliers.
These vendors are already facing challenges and cannot withstand additional blows to their businesses as a result of the volume shift away from local manufacturing.
Given the dire consequences, PAMA urges the government to retain the regulatory duty and take immediate steps to support the resumption of completely knocked-down (CKD) operations in the local auto industry.
The association emphasizes the importance of these actions in preserving local manufacturing, particularly for component manufacturers who are already facing significant challenges.
The elimination of regulatory duties on luxury vehicles in Pakistan has raised serious concerns in the local auto industry.
PAMA’s warning of potential market share losses, the threat of a complete industry shutdown, and the negative impact on local parts manufacturers emphasizes the situation’s urgency.
The government must now carefully consider these concerns and take proactive measures to ensure the local auto sector’s continued viability and growth.
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