Lower duties on completely built-up vehicles risk local vendors, auto experts say

Business Recorder reported that auto experts believe lower duties on imported CBU vehicles could push buyers away from locally assembled models and squeeze domestic parts vendors. The experts asked the government to protect the local vendor industry. Aamir Allawala described the sector as an interlinked system spanning raw materials, over 1,200 parts makers and over 100 vehicle assemblers.

The Pakistan Association of Automotive Parts & Accessories Manufacturers, known as PAAPAM, wants a 50% minimum duty on built-up vehicle imports and 40% on parts made in the country. Allawala said auto policies from 2016 to 2026 favoured assembly, expanding plants from 3 to 14 global brands while localisation stayed weak. He warned that the proposed 15% peak tariff reduction under the National Tariff Policy could badly hurt local parts manufacturing.

Allawala also pointed to export barriers such as security concerns, weak trade agreements, high costs and limited state support, even though auto parts exports already exceed $200 million a year. Senior vice chairman Shehryar Qadir said the revised tariff regime cut the CBU duty to 30% while leaving the CKD duty at 30%, erasing the gap that favoured local assembly. He also put the cost disadvantage faced by local parts makers at about 34% compared with international rivals.