Used cars’ import hurting auto-parts’ industry
AS a former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), I feel greatly saddened to see the damage caused to the local industry by the influx of five-year-old used cars into Pakistan. During the last six months almost 25,000 used vehicles have been imported, amounting to 25 per cent of the total market demand for automobiles in the country and causing an annual loss of sales revenue worth Rs20 billion to the parts-manufacturing industry.
Most of these 1000cc or higher vehicles such as Vitz, Corolla, Belta, Premio, Axio, Mira, Probox, Land Cruiser and Pajero are being sold in the price range of Rs1.1 million to Rs3.5 million. These vehicles, which are being purchased by elites, are being imported at the cost of the local automobile industry.
Local assemblers of passenger cars are purchasing 60 per cent of their parts from domestic parts’ manufacturers. Hundreds of components such as bumpers, radiators, mufflers, batteries, tyres, wheels, airconditioners, wiring harnesses, instrument panels, steering wheels, sun-visors, seats, carpets, interior panels, sheet metal and plastic parts are being locally produced by more than 400 vending companies, employing almost 200,000 skilled workers.
The livelihood of these workers is being sacrificed by the government to appease the used-car lobby and elite segment of society.
Domestic parts’ manufacturers have now started to feel the pinch as the demand for many locally produced models has slowed down, as the market size is 30 per cent lower than the peak level of 2007 during which 200,000 vehicles were produced. It is the primary responsibility of the government to protect the working class employed in the domestic industry. Therefore, the allowable age for import of used vehicles must be reverted from five years to three years before an irreparable damage is caused to the local parts’ manufacturing industry.