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Desperate times call the Pakistani government to take desperate measures. Imposing a ban on luxury items seems the best way to save foreign exchange reserves. New luxury cars and other 800 items of different 33 categories are put under complete ban to save $500 million monthly.
The Pakistani government has banned the import of all used luxury and new CBU cars. Only commercial vehicles will be imported, while luxury passenger vehicles are entirely forbidden to enter the country’s borders.
Car sellers and buyers fear the ban will affect the local car prices. People also fear that it will affect the already booked cars, which were to deliver by May 19, 2022. Meanwhile, the doors have been closed for all the vehicles. Only the cars that have reached the Karachi port will be cleared and delivered to buyers.
Moreover, the Pakistani government has increased the duties on the import of CKD kits (completely knocked down) to assemble local cars. There are also reports that the government bodies have proposed increasing regular duties on cars above 1000cc or 1300cc from 70% to 100%. However, this decision is still pending approval by the ministry’s end, and perhaps we’ll get confirmation soon.
The luxury cars that are out under complete ban in Pakistan include Audi, BMW, Mercedes Benz, Porsche, and companies like Haval, MG, and Toyota, and the sale of other imported cars in Pakistan will also lose their sales. On the other hand, the increased duty on CKD kits will increase prices for locally assembled cars, making them farther away from the commoner’s reach.
Let’s see what the Pakistani government decides for the RD on importing CKD kits.
What do experts think about the ban on imported cars?
The Pakistani local car industry will be affected by this recent decision of the Pakistani government. However, the estimation of this impact is still to be calculated. To be sure, the more demand for locally assembled cars leads to less buying capacity. They may not have the option to buy their dream cars but compromise on the less fancy cars.
For example, the people who want to buy Civic may be forced to buy City, and those who were buying City may have no choice but to buy Yaris, and the people who used to prefer Sadan cars may have to buy hatchbacks.
Price hike of local cars after the import ban
Back in 2016, the Pakistani government tried to remove the loopholes related to the critical import of luxury cars. However, the government still agrees to allow the import of used vehicles that don’t come under the category of luxury cars. This is a good decision, and buyers still have options to buy from 11 to 12 local car selling companies in Pakistan.
However, there is a risk that Pakistani local car sellers will try to impose more own on cars. They will probably try to exploit buyers by demanding more own on the cars.
Nevertheless, the dollar’s rate is ever-shooting, and the Pakistani currency is going down day by day, so the car prices will have to go up in any case. Pakistani car buyers still have to face limitations with less buying capacity. It also means that with less buying capacity, people will have no choice but to demand more used cars, and probably, prices of used cars will go up as well.
It might be useful read for you: 8 Top Low budget Cars in Pakistan
How can the Pakistani government avoid an import ban in the future?
The sole answer to this is that we have to increase exports to create a balance between our exports and imports to save our foreign exchange reservoirs. For this, we have to open up new local companies that can produce quality-oriented gadgets that could be exported. But the real agony is, the Pakistani government tends to impose frequently changing policies regarding hybrid cars, electric cars, or financing of used cars.
These policies continue to change, which is one of the most annoying phenomena for Pakistani citizens. It is also one of the big hurdles that local industry cannot grow and cannot participate in balancing export imports of Pakistan. And perhaps this is the reason we cannot control the ever-shooting dollar rates.
What alternative could the Pakistani government take instead of an import ban?
The Pakistani government could take the initial step to remove the subsidy on petrol prices. It sounds insane decision for the Pakistani citizens who are already struggling with a massive inflation crisis and huge taxes—delivering petrol at original prices would have been another price-hike bomb shelling over them. However, seeing higher petrol prices, people would have re-adjusted their daily lifestyle. For instance, they can avoid excessive traveling.
Giving subsidies on petrol prices is also a political decision by the current government to gain the power vote and stability. Nevertheless, removing subsidies on petrol may have reduced the chances of an import ban.
How can we control the dollar rate?
Again, one sole solution is to create a perfect balance between imports and exports to increase foreign exchange reservoirs. The government should continue to give subsidies on hybrid and electric cars to reduce the demand for petrol and to control the dollar rate. Since we are facing continuous intervals of load shedding and perhaps it would have been not easy to charge electric cars. With the massive load-shedding hitting the entire country, maybe the electric car users may not get the time to charge their cars. Therefore, electric vehicles are also facing impossibilities in Pakistan.
What is the reaction of car dealers over the imports ban?
The clash of price hikes, continuously changing policy, and the war between emphasis on using used cars or new cars remains the same.
The actual compromise will have to be made by the Pakistani buyers by going down with their choices and changing their lifestyles according to their affordability. It is a hard pill to swallow by the Pakistani buyers that they have to make critical choices when buying cars. They might not be able to purchase the cars of their dreams anymore. But they still have options to go down for a cheaper car or used cars since it’s the demand of the recent political chaos and rapidly changing global market trends.
You may find it a useful read: Latest And Modern Cars In Pakistan.
FAQs
1) What is LC in import?
LC in import is one of the safest methods of importing goods, and it permits you to manage shipping dates or reduces the hurdles in the shipment schedule.
2) Can I take an old car to Pakistan?
Yes, The old cars that are more than 3 years old can be taken to Pakistan
3) How many years old cars can be imported in Pakistan?
The old and used cars that are not older 5 years can be taken to Pakistan.
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