Auto sector vendors urge govt to ensure consistency in policies

PAMA appeals government to protect millions from unemployment (direct or indirect)

ISLAMABAD   -   The automobile vendor industry finds itself in a precarious situation due to low production and the influx of used car imports.

The auto sector vendors have urged the government to ensure consistency in policies, citing the supply and demand crisis in the local auto industry, which has led to frequent plant shutdowns of original equipment manufacturers (OEMs), adversely impacting vendors. During the recent year, more than 30,000 used cars and SUVs were imported in the country which is 700 percent time increase compare to last year, in which 3386 units used cars were imported and local automotive manufactures, who have invested heavily in capacity enhancement and developing local vendor industries, now find themselves at a significant disadvantage. The unfair competition posed by the abundance of imported used cars not only undermines their efforts but also threatens the livelihoods of countless workers employed directly and indirectly in this sector.

Pakistan Automotive Manufacturers Association (PAMA) has demanded of the government to provide support for the local auto industry to thrive, grow, create more jobs and be beneficial to the national economy and resources.

The local industry has shown serious concerns over the government’s policies for the auto sector. Over $ 2.5 billion investment with a production capacity of 500,000 units per annum, this has been reduced only to around 100,000 during the current fiscal year. The PAMA association has noted that the ‘allowed’ used automobile imports are seriously damaging the economy with grey channel transactions in billions, risking the local industry and millions of jobs and their families’ livelihood, discouraging the international automotive players, while enjoying extremely favorable policies by the authorities seriously damaging the local industry.

“Only during the first 8 months of the FY 23-24, this phenomenon has caused over Rs 45 billion loss to the local industry, the economy and most importantly has badly risked the livelihood of millions of families. The used car import was initially allowed to the overseas Pakistanis, but that facility has been negatively exploited by corrupt practices to import automobiles in overseas Pakistanis’ names, but use these for profit-making,” the PAMA has explained.

It has appealed to the authorities to either stop/discourage or make it hard to import used cars into the country to give a chance to the local industry to grow, thrive and contribute better to the local resources. The PAMA has asked the Prime Minister, ministries of finance and commerce, planning and development and SFIC (Special Investment Facilitation Council) to revisit the industry policies, and support local automotive industry through favorable/unbiased policies, as they are supporting local industry growth, job creation, more contribution to the economy and an industry that has the potential to help government achieve its goals.

Explaining the current situation, the PAMA noted that highly favorable and partial taxation & duty policy towards used car imports has severely damaged the local industry resulting in reduced demand in locally manufactured automobiles, reduced efficiency of the production facilities, loss of jobs for vendors and loss to the local industry and national economy. It explained that with over 60% of the car manufacturing parts produced locally, the unfavorable policies are resulting inefficient & only partially operational production facilities locally resulting in job losses and lack of encouragement & motivation to boost and grow local industry.

The PAMA has appealed the government to protect million of families from unemployment (direct or indirect). An industry that provides over 2.5 million direct & in-direct jobs and over 5 million jobs in the related to the auto sector is severely endangered by partial and unfavorable policies. It said that even with 13 local manufacturers/assemblers and thousands of used import cars, the segment is still out of reach of a common man due to sky rocketing taxes and duties – and will still be out of reach to majority, unless this burden eases.

The PAMA has asked the government to collaborate with the local industry. A consistent policy towards the local industry enables it to become more productive towards boosting local industry, resources and contribution to the economy.

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