Pakistan has experienced record foreign exchange expenditure as a result of the highest-ever arrival of new autos in 2020-21, driven by robust demand, followed by a resurgence in the import of old vehicles.
In the fiscal year 2020, the government imported a record 10,513 units of new cars, jeeps, vans, pickup trucks, two-wheelers, and buses, compared to 1,680 units in the fiscal year 2020, 3,716 units in the fiscal year 2019, and 7,424 units in the fiscal year 2018.
In addition, for the first time, 390 new electric cars and 19 used electric vehicles (EVs) were imported in fiscal year (FY) 21.
While new companies from Korea and China enter the local assembly of new models, cheap lending rates have given the auto industry a breath of fresh air, used imported vehicles, and locally built vehicles by established players continue to enjoy strong demand.
Read Also: SBP Restricts Financing For Imported Cars
New automobiles and jeeps accounted for the largest share of sales in FY21, accounting for 10,157 units, compared to 893 units in FY20, 2,427 units in FY19, and 3,758 units in FY18.
In the context of overall automobile imports of around $2 billion, the import bill for completely and semi-knocked down (CKD/SKD) kits for cars, motorcycles, and heavy vehicles reached a record $1.6 billion in FY21, compared to $727 million in FY20, and the import bill for used and new vehicles reached $386 million in FY21, compared to $219 million in FY20.
In the first two months of the current fiscal year (2MFY22), imports of complete knockdown/shell knockdown (CKD/SKD) kits for local assembly of all vehicles increased by 214 percent to $369 million from $117 million in the same period last fiscal year, while imports of completely built-up units (CBU) increased by 118 percent to $103 million from $47 million in the same period last fiscal year.
Imports of used cars, trucks, vans, and pickups increased to 29,276 units in fiscal year 21 from 16,455 units in the fiscal year 2020, despite the fact that they were 49,990 units in the fiscal year 2019 and 73,640 units in the fiscal year 2018, according to the Chairman of the All-Pakistan Motor Dealers Association (APMDA) H.M. Shahzad.
During the period FY18 to FY21, the majority of used vehicles arrived through the personal luggage plan, with only 946 motorcycles/scooters arriving under the transfer of residency scheme, according to him.
After explaining that it took time for importers to comprehend the government’s decision to restrict used car imports, Mr. Shahzad stated that imports of used cars and jeeps resumed in FY21 after experiencing a sluggish trend in FY20. He further stated that used cars under 1,000cc were particularly popular in FY21 compared to the previous year.
According to the import policy order 2017, it is mandatory for all vehicles (new and used) imported under various schemes – the duty must be paid out of foreign exchange arranged by Pakistani nationals themselves or a local recipient supported by a bank encashment certificate showing conversion of foreign remittance to local currency – be paid out of foreign exchange arranged by Pakistani nationals themselves or a local recipient supported by a bank encashment certificate showing conversion of foreign remittance to local currency
As stipulated by the policy, any funds used to pay duties and taxes must be transferred from the account of a Pakistani national who is sending the vehicle from abroad, and any funds received must be transferred to the account of a Pakistani national who is sending the vehicle from abroad or, in the event that his account is non-existent or inoperative, the account of his family if his account is non-existent or inoperative.
