Imported Used Cars May Get More Expensive in Budget 2024-25

The local car market has seen a significant influx of imported used cars, causing concern among local car manufacturers and vendors. Over the past few months, they have voiced their worries to the government, stressing the need to maintain duties on these imports. They argue that the economy has already suffered a loss of Rs. 50 billion in the first eight months of the current fiscal year due to this surge.

Increasing Regulatory Duty on Used Cars

In response, the Overseas Investors Chamber of Commerce and Industry (OICCI) has also highlighted the issue, urging the government to keep regulatory and additional duties on imported used cars. Recent media reports suggest that the government is considering increasing the regulatory duty (RD) on these imports in the upcoming federal budget for 2024-25.

Proposed Changes in Duties

According to these reports, the RD on cars with engines over 1800 cc could increase by 30 percent, going from the current 70 percent to 100 percent. Additionally, a 15% duty on used cars up to 1800 cc is being proposed. However, both old and new hybrid cars will remain exempt from these duties.

Surge in Import of Used Cars

The import of used cars in Pakistan has seen a dramatic rise, with an increase of 684 percent in the first half of the current fiscal year compared to the same period last year. This surge includes various categories of cars, from economy and small cars to commercial vehicles, SUVs, vans, and even luxury vehicles. This significant increase can be attributed to the removal of regulatory duty on used cars up to 1800 cc in the federal budget for the fiscal year 2023-24.

Reasons for the Surge

Several factors have contributed to the rising preference for imported used cars. Competitive pricing and additional features have made these cars more attractive compared to locally assembled vehicles. Many consumers find imported cars to be more affordable and of better build quality.

Conclusion

The proposed increase in regulatory duties on imported used cars in the upcoming budget aims to address the concerns of local car manufacturers and vendors, as well as to curb the economic loss caused by the surge in imports. While these measures might make imported used cars more expensive, they also seek to protect the local automotive industry. However, the debate continues on whether these higher duties are justified, given the affordability and quality of imported used cars compared to their local counterparts.

AASMA MAJiD

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