Chairman of the All Pakistan Motor Dealers Association (APMDA), Haji Muhammad Shehzad, expects the upcoming federal budget to offer major relief for used car buyers, including reduced import duties and an increase in the age limit for used cars from the current three years to five years.
Speaking exclusively to Express News, Shehzad said that this move is anticipated in line with Pakistan’s commitments under its agreement with the International Monetary Fund (IMF), in which the country agreed to gradually ease restrictions on car imports.
He stated that Pakistan has assured the IMF it will reduce the heavy duties and taxes on used cars over the next five years. These cuts will come either through lower sales tax or revised customs duties, according to Shehzad.
Currently, total duties on imported vehicles range from 96% to as high as 475%, but these will be gradually reduced by 20% annually over the next five years, he explained.Tariff cuts, followed by an increase in the age limit of used cars to five years from three years, may slow down sales of locally made vehicles.
Used cars arriving under various schemes will further make deeper inroads, as cuts in tariffs on new and used vehicles will bring down prices of these vehicles.The APMDA chairman also claimed that allowing the import of five-year-old cars, particularly on a commercial basis, could significantly lower vehicle prices.
He noted that a five-year-old Japanese car costs nearly half as much as a three-year-old model.For instance, if a three-year-old vehicle is priced at $8,000, a five-year-old equivalent could be bought for $3,500 to $4,000. This could translate to a price drop of Rs 500,000 to Rs 1 million.
Shehzad said that if the proposed changes go through, the price of small cars could drop by as much as Rs 1 million.He claimed the cheapest locally assembled car is currently priced at Rs 3.1 million, while a comparable model in a neighbouring country costs just Rs 375,000.
“Even after adjusting for the exchange rate, that car would cost around Rs 1.3 million here,” he said. With reduced duties and a relaxed age limit, he added, better-quality Japanese cars could be made available to Pakistani buyers for under Rs 2 million.
