Pakistan is witnessing and all time high new car imports in fiscal year 2021. The increase comes into sight following record-breaking foreign exchange expenditure on the highest-ever number of new autos in 2020-21 due to robust demand. It was followed by a revival in used car imports. On one hand, the entry of various Chinese and Korean Auto Manufacturers provided much needed boost to the depleting Auto-Sector. But the current account deficit widens as a result of the recent flood of new car manufacturers and vehicles.
Car imports have grown by 669 percent in the last three months, according to an official document. Vehicle imports in Pakistan totaled $266.28 million between July and September 2021, compared to $34.63 million during the same period last year. To lower Pakistan’s current account deficit, the government intends to intervene and limit automobile imports.
Car Imports Stats
In FY21, the country import 10,513 new cars, jeeps, vans, pickup trucks, two-wheelers, and buses, according to data. Pakistan imported 1,680 units in FY20, 3,716 units in FY19, and 7,424 units in FY18, respectively. Moreover, In FY21, 390 new Electric Vehicles (EVs) and 19 old EVs are imported for the first time. The total cost of automotive imports stands at $2 billion. The cost of importing completely and semi-knocked down (CKD/SKD) kits for cars, motorcycles, and heavy vehicles is $1.6 billion, up from $727 million in FY20. Meanwhile, in FY21, $386 million spent on the import of used and new vehicles, up from $219 million the previous year.
Future Car Prices in Pakistan
A proposal to limit the expanding imports of pricey luxury and exotic electric vehicles suggest including new taxes. Imports of electric vehicles with battery packs larger than 50 kWh would face a 50 percent Regulatory Duty (RD), according to the plan. Previously, the Government waved off majority of Duties on Imported EVs to boost its import. The decision taken to combat climate change and encourage people to drive EVs. However, just after months, the Government is now finding ways to reduce the import.
Furthermore, the proposal proposes a 50 percent reduction in the RD for automobiles with engines ranging from 1501 to 1800cc. It also proposes levying a 10% Federal Excise Duty (FED) on imported automobiles with the same engine capacity. The proposal also calls for a 10% FED on domestically built autos with engines larger than 1500cc. With the implementation of these vehicle import restrictions, price increases in the Pakistani car market will be inevitable.
