The appeal was made by the members and officials of Pakistan Automobile Manufacturers Association (PAMA) and Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) during a press conference held here at a local hotel on Tuesday. They said that commercial import of used cars was officially banned but instead of taking action against the violators of this ban, the government bodies, including the prestigious institution like FBR, were backing the criminals issuing forged and misleading figures.
Chairman PAAPAM Munir K. Bana alleged that FBR wrongly claimed that age limit reduction of used cars may cost government kitty Rs 17 billion per annum, based on duties/taxes collected during 12 months of 2011-12, on approx 56,000 imported used cars. In fact, the revenue generated by the government on similar quantity of vehicles manufactured by the local industry would have been Rs 21.5 billion, exceeding the levy on used cars by Rs 4.5 billion per annum (an increase of 26 percent), he added.
He pointed out that foreign exchange component of a Corolla car is $5400 while similar five years old used car is imported at $10682. This means that the state not only loses revenues but also foreign exchange when any five years old car is imported, he added.
"In case of three years old used car the duty component is higher at $7040 but the foreign exchange component is also higher at $11600," Munir said. He said that OEMs and burgeoning Auto Parts Manufacturing industries, consisting of over 3000 SME units, who are the backbone of the auto industry and ensure uninterrupted supply of hi-tech auto parts for assembly of all kinds of vehicles, deposit around Rs 80 billion per annum into the government treasury.
While, sharing an example, Munir said that local addition in Corolla is equivalent to $4400 per unit. These parts are produced by local auto vendors that provide jobs to thousands of workers whereas in case of used car there is no local component and every component is made in a foreign country thus the jobs are created outside Pakistan. He further said that above facts also belie FBR claims, where they state that no manufacturing exists in Pakistan and all auto parts are imported by assemblers from Thailand, Japan, etc.
"It is also unfortunate that the FBR has also not even mentioned the colossal foreign exchange losses suffered by the government, as a consequence of imports of used cars. It is a known fact that import cost of CKD for a new vehicle is lower than 50 percent of an average C&F cost of a used vehicle," he added.
On the occasion, Abdul Waheed, DG PAMA, pointed out that used car import was allowed so that the consumers could get automobiles at low rates. However, the statistics prove that the prices of used cars are comparatively much higher or same as that of Pakistan made new cars.
"The price of brand new Pakistan made Corolla is $16900 while a five years old imported used car of same engine size is sold at $15100 and this small difference of $1800 is not worth driving a five years old car," he said adding that a similar three years old car is sold in the local market at $18600. "Is it worth buying a three years old car at higher price than a brand new car," he questioned? PAMA and PAAPAM also appealed the government to trace and bring all the used car dealers into the tax net so that they become fully documented and pay their fair share of taxes.