Key points
- Carmakers blame high taxes for prices
- Local carmakers fear profit decline
- Imported cars seen as more viable
ISLAMABAD: A government official announced on Monday that Pakistan will ban the import of accidental vehicles and impose a 40 per cent new tax when it allows commercial imports of used cars next month.
The move, aimed at protecting local manufacturers, may delay benefits to consumers expected from trade liberalisation.
Joint Secretary for Trade Policy, Mohammad Ashfaq, told a joint Senate committee meeting that low-quality and damaged vehicles will not be permitted. He added that under the IMF agreement, Pakistan will offer 40 per cent tariff protection on new cars starting this fiscal year, according to The Express Tribune.
Currently, commercial car imports are banned, with most used vehicles entering via personal baggage or gift schemes. These make up around a quarter of the total market, as many consumers prefer lightly damaged imported cars over local models.
Special schemes
Ashfaq noted that the government has yet to decide on the continuation of these special schemes. He added that over the next four years, the 40 per cent tariff would gradually be removed, and eventually, cars aged six to eight years would also be allowed, provided they meet environmental standards.
The IMF has mandated that Pakistan reduce its overall import tariffs from 20.2 per cent to 9.7 per cent within five years. By FY26, tariffs will fall to 15.7 per cent, with further cuts in customs, regulatory, and additional duties.
Local carmakers
Local carmakers, including Indus Motors and Pak-Suzuki, criticised the plan. Indus CEO Ali Asghar Jamali said high vehicle prices stem from taxes of 30 per cent to 61 per cent. For instance, the SUV Fortuner’s price includes 61 per cent in taxes.
Jamali added, “Our marketing has been bad… everyone feels that we are the bad people,” and said importing used cars would be more profitable than manufacturing.
A Pak-Suzuki representative added that local production is costly and “easier to import and sell the cars.
