Pakistan allows import of used cars

ISLAMABAD - Pakistan’s federal cabinet Wednesday decided to allow import of used cars in a bid to clamp down on escalating prices by local vehicle manufacturers.

A cabinet meeting, held to approve the recommendations of the Economic Coordination Committee (ECC), was chaired by Prime Minister Yousuf Raza Gilani, Aaj TV reported.

The cabinet had Dec 8 last year approved import of used cars, on the recommendation of the ECC, but the notification in this regard was withdrawn later.

“The cabinet had allowed import of reconditioned cars, but it failed to rectify the market situation because only 30-40 thousand vehicles were imported, which could not meet the demand,” the report said.

Realising the gravity of the situation, the ECC again proposed import of used cars to control the cartel of new car manufacturers and the cabinet endorsed it Wednesday.

However, import of more than five-year-old cars would not be allowed, the report said, adding that the decision will significantly ease the burden on lower-income groups who are unable to afford new cars.

Pakistan’s four largest car manufacturers are Atlas Honda, Toyota Indus, Pak Suzuki and Dewan Hyundai Motors. They collectively have a production capacity of around 350,000 cars annually in 800-1600 cc categories.

However, the local market needs around 500,000 cars annually and the burden is being taken at the moment by the used cars sector, where prices have shown a sharp upsurge.

The manufacturers also increased the prices of different models by 50-60 percent during the last three years while the dealers are charging an extra amount of Rs.10,000-Rs.50,000 on different models to cash in on the shortage of vehicles.

Hafiz Shahzad, president of the car dealers’ association, said it was a good decision and should have been taken long ago. “It would certainly help in easing the burden on the market as well as the buyers,” he said.