Car prices can be reduced only through maximum localization

PAAPAM Members appreciate PM notice of higher car prices; want 10-year ‘Auto parts localization policy’.

The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has appreciated the PM’s taking notice of higher automobile prices in the country, which is mainly due to lower content of localized parts and government’s strict tariff and taxation policy, affecting the car prices in the country and need to be reviewed.

In a meeting held here today, the senior PAAPAM members endorsed the Federal Cabinet direction to launch inquiry in this regard, saying the rates of vehicles can be reduced through full implementation of localization regime. The imposition of RD, additional customs duty, devaluation of rupee and higher federal excise duty are major burden on the consumers of cars, they added.

“As the existing Auto Policy is to expire by the midyear, right away triggering preparations for AIDP 2021-26, it is right time to give a complete shake up to the stagnant system regulating the Automotive regime, to bring transparency and credibility to the procedures,” they demanded.

The participants of the meeting observed that Prime Minister Imran Khan has rightly pinpointed the issue, because the country is being exploited as a consumer country instead of manufacturing country. We need to “Make in Pakistan” not “Assemble in Pakistan”, they stressed.

“PAAPAM fears that in absence of a transparent import regulatory system for automotive parts economic situation will have a further dip with New Entrants, coming into field and launch of Electric Vehicles (EVs) being on the doorstep.

PAAPAM, as a major organ of the Automotive Industry in terms of employment, revenue contribution to exchequer is fully geared up to venture formally in global exports/supply chains, an area so far denied to local parts manufacturers,” they added. The participants of the meeting said that the entire industry is dependent upon unregulated imports resulting in higher car prices.

They lamented that in spite of having exclusive Pakistan’s domestic market for over three decades the country has failed to achieve anticipated localization targets, leading enormous foreign exchange outflows in exchange of costly parts’ import, having no check at all.

“It’s the time to deeply analyze the root cause of high prices of cars in the country and devise a long-term strategy to timely produce the vehicles in line with demand, besides devising and implementing 10-year ‘Auto parts localization policy’ (APLP) to ensure the localization of all value-added parts.”

They said that it would result in cost reduction, reduction in lead time parts availability to assemblers and vehicle availability to consumers.

Moreover, these measures will create technology awareness, generating skilled jobs for local youth, reducing revenue loss to the government exchequers, besides forcing the OEMs to invest in inspection & testing labs to reduce lead time for approval of locally developed auto parts.

They said that the trio-government regulators in the automotive Sector namely EDB (Engineering Development Board)/MOI&P, MOC and FBR have yet to devise a transparent and coherent system for regulating imports of CKD Kits for lot many variants of vehicles locally assembled.

They said that the EDB, with its meager resources may not singularly handle the gigantic task of classifying Automotive Parts import, directly affecting vehicle prices, promoting the local industry and watching financial interests for national exchequer.

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