Govt plans to impose 40% tariffs on used cars

The government has announced a ban on the import of accidental vehicles and imposed a 40% tariff on commercial imports of used cars, a move aimed at shielding local manufacturers but delaying relief for consumers, according to reports.

The decision was conveyed by Joint Secretary Trade Policy Mohammad Ashfaq during a joint session of the Senate standing committees on finance and industry. He said the measures were part of Pakistan’s commitments under the International Monetary Fund (IMF) programme, which requires gradual liberalisation of the auto sector.

Currently, cars enter the market through schemes such as transfer of residence and baggage, accounting for a quarter of domestic demand. From September, Pakistan is bound to allow commercial imports of used cars up to five years old, with age and quantity restrictions to be lifted entirely by July next year.

Industry representatives, however, claimed prices would remain high due to heavy taxation. Indus Motors CEO Ali Asghar Jamali told lawmakers that government levies constitute between 30% and 61% of a vehicle’s price. He cited the Fortuner SUV, where Rs14.8 million out of a Rs24.4 million price comprises taxes.

Local assemblers also admitted shortcomings in safety standards, acknowledging that most locally assembled cars are equipped with only two airbags compared with six in imports.