IMC CEO Proposes Used Car Import Restrictions to Boost Revenue

Staff Report

Ali Asghar Jamali, Chief Executive of Indus Motor Company (IMC), has proposed used car Import restrictions in the budget to the government, saying it would result in a revenue increase of up to Rs. 80 billion.

He added that the removal of regulatory duty on the import of used cars had led to a surge in imports, damaging the local auto industry.

“I have met with the Finance Minister and FBR officials and proposed restrictions on the import of used cars that may result in increasing revenue from Rs. 70 to Rs. 80 billion,” he said while talking to journalists on Thursday.

Jamali emphasized the urgent need for remedial measures from the current government in the upcoming budget to bolster the local auto industry and restore investors’ confidence.

He highlighted that the local auto industry has urged for an increase in duties and taxes on used cars in the upcoming budget to support the local industry, especially considering the slightly improved economic activity, stable currency, and potential for a cut in interest rates.

“Contrary to our expectations of improved demand from January 2024 onwards, this year has not seen a turnaround for Pakistan’s auto industry due to the heavy import of used cars,” Jamali remarked.

It is worth adding here that local automakers witnessed a slight improvement of about 28% in their sales in February 2024 against last year same period (11,593 in Feb ‘24 vs 9,011 in Feb ‘23).

However, on the other hand, the imports of used cars recorded over 711% (3,213 against 396 units) increase in February alone, against the same period last year.

“If this trend persists, our vendors’ industry will face closure due to the unsustainable business environment, with plant utilization capacity levels ranging between 25 to 30% for the past few months,” Jamali expressed concern.

He further noted that the local auto industry has invested approximately $2.5 billion and contributed about Rs. 400 billion in taxes in FY2022 alone, while also creating approximately 2.5 million direct and indirect jobs within the country.

The import of an average of 3,068 used cars per month from July 2023 to April 2024 has significantly impacted local businesses, leading to potential unemployment and economic losses in terms of taxes.

Jamali also highlighted the use of illegal financial channels for foreign payments related to used cars, contrasting it with the local auto industry’s adherence to legal means for importing parts. Pakistan’s Car Sales Down 3% MoM in March 2024

He emphasized the need for the government to ensure that used vehicles are only imported for overseas Pakistani families’ usage and urged for the rationalization of import taxes on used car imports to support the domestic industry and revitalize the local market.

In response to a query, CEO IMC estimated that incorporating the local industry’s proposals into the budget could increase FBR revenue by Rs. 80 billion.

Regarding exports, Jamali mentioned Toyota’s plan to export vehicles to Africa starting July 2024, calling on the government to expedite the signing of Free Trade Agreements (FTAs) with African countries to facilitate car exports.