Pakistan’s car import expenditure has witnessed a remarkable surge in the first two months of the fiscal year 2023–24, as reported by the Pakistan Bureau of Statistics (PBS).
The figures reveal a staggering Rs 9.07 billion spent on car imports during July and August, marking a substantial increase of 109 percent compared to the previous fiscal year’s Rs 4.34 billion.
In foreign currency terms, Pakistan imported Completely Built Unit (CBU) cars valued at $31.37 million during this period, a notable rise from the $19.72 million spent in the same period of the previous year.
This spike in car imports is significant, especially considering Pakistan’s ongoing challenges related to a severe foreign exchange shortage required to meet external obligations.
The ban on luxury and non-essential item imports, including motor vehicles, implemented in the prior fiscal year was lifted as per the conditions set by the International Monetary Fund (IMF).
This move, along with the removal of regulatory duties, made the import environment more favorable for CBU vehicles but had unintended consequences for the local automobile manufacturing industry.
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The removal of regulatory duties significantly increased the tax burden on locally manufactured vehicles, making them less competitive with their imported counterparts.
Mohammadali Habib, Chairman of Indus Motor Company Limited, pointed out that this situation hindered the industry’s growth potential and its ability to cater to diverse customer segments.
Pakistan’s domestic car industry is grappling with various challenges, including rising inflation, high financing rates, and raw material shortages. Import compression measures introduced in the previous fiscal year disrupted the manufacturing process and supply chain for domestic production, resulting in plant shutdowns and underutilized capacities.
Furthermore, the import of Completely Knocked Down (CKD) car units decreased by 18 percent to $131.28 million during the first two months of the fiscal year 2023–24, compared to the previous year’s $160.27 million. These statistics underscore the complex dynamics and ongoing struggles within Pakistan’s automobile sector.