RECORDER REPORT

ISLAMABAD: The eroding rupee value vis-a-vis the dollar has adversely affected imported used car business leading to closure of a number of showrooms in the country.

Car imports declined by nearly 80 percent after 18 January 2019 when Ministry of Commerce (MoC) revived the condition that payment of duties and taxes for all car imports be made in foreign exchange and be directly remitted from abroad by the person importing the vehicle. Earlier, most used cars were imported in Pakistan under baggage rules or gift scheme, designed for personal purposes only, but were then sold in the market. The situation has also worsened as the rupee has eroded in value vis a vis the dollar.

This was confirmed by H.M. Shahzad, Chairman All Pakistan Motors Dealers Association. According to him, there has been a significant drop in import of used cars due to these two reasons.

“Last year, we imported 82000 vehicles as compared to 100 cars in the first five months of 2019,” he said adding that last the year federal government generated a revenue of Rs 100 billion from the import of used vehicles.

According to Pakwheels’ Website, last year’s imported car market had 19 percent share in total sales which has shrunk significantly this year.

This year prices of imported 660cc vehicles have increased from between Rs.1 million to almost Rs.1.5 million. Prices of imported vehicles of 1000cc engine capacity have reached nearly Rs.2 million from Rs.1.5 million. On average, the prices of cars ranging from 1000cc to 1800cc and above have increased between Rs.200,000 and nearly Rs.500,000.

According to a survey of used car dealers, one showroom on average sold 8-9 cars every month, which declined to as little as 2-3 cars. The rented space of a car showrooms at Blue Area on average costs roughly around Rs.200,000 to 300,000.

Most of the showrooms have started to cut down staff.

The government’s policy to discourage the import of cars is good for the local industry, but a surging dollar has raised the prices of the locally manufactured cars as well making them out of the reach of the common man, an anecdotal survey of possible car buyers revealed.