Recently, the Auto Traders and Importers Association responded to the news that the regulatory duty on imported used cars in Pakistan has been lifted. Despite the anticipation of reduced prices, Senior Vice President Syed Amir Ali stated that the end of the duty would not have a significant impact on imported used car prices in the country.
The regulatory duty was imposed six months ago, and prices of imported used cars have already risen in response. However, the government issued an embargo on the imports due to depleted dollar reserves which interjects with the RD policy and hence a decision to expire the RD notification on 30th April was taken as it would be seemingly ineffective in light of the import embargo. These federal steps have somehow caused confusion in the consumer’s mind that the prices will eventually descend, as mentioned earlier, it is not the case and will not be until the dollar rate comes down, imports resume or the economy gets stable.
There is a speculation roaming around that locally assembled car prices will go down/decrease after exemption from regulatory duties, “RD will have no impact on locally assembled car prices”
It is also to be considered that regulatory duties are not the sole determining factor in the pricing of imported cars. Other factors have an influence as well,
- Dollar exchange rates
- Restriction on LC (Letter of Credit) for imports
- Rising inflation
- Ban on imports
- Political & Economic instability
Considering industry in the above factors there is a possible increase in prices as OEM’s volumes are shrinking.
