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KARACHI: The Institute of Cost and Management Accountants of Pakistan (ICMA) has said the government’s decision to allow commercial import of used cars up to five years old may bring short-term fiscal gains through an initial 40 per cent regulatory duty (RD) and offer consumers more choice.
However, the policy raises concerns about foreign exchange reserves, balance of payments, and the long-term prospects of the local automotive industry.
ICMA’s Research and Publication Department noted Pakistan’s auto sector has long been shielded by high tariffs and regulatory barriers, enabling local assemblers to dominate with limited pressure to improve quality or affordability. Previous liberalisation efforts in the 2000s provided temporary relief but met strong resistance from the industry, highlighting the sector’s sensitivity to policy shifts. The recent Economic Coordination Committee (ECC) decision marks a notable change that could reshape industry dynamics, consumer behaviour, and trade flows.
In the short term, vehicle prices are unlikely to fall significantly. The 40pc RD, combined with exchange rate volatility and importer premiums, will keep landed costs high. However, consumer expectations are shifting, with many delaying purchases in anticipation of more affordable, better-quality imports. Imported used cars often feature safety and efficiency enhancements, such as airbags, ABS, hybrid engines, and improved fuel economy, which may raise standards and prompt local manufacturers to enhance their products.
