Automakers warn EV policy may undermine local auto industry

In letter to EDB, PAMA warns that policy could lead to unchecked import of Complete Built-Up (CBU) vehicles

By Our Correspondent
November 21, 2024
A electric car charging station is pictured in a parking lot on March 13, 2021. — Reuters
A electric car charging station is pictured in a parking lot on March 13, 2021. — Reuters

ISLAMABAD: The Pakistan Automotive Manufacturers Association (PAMA) has raised significant concerns over the proposed New Energy Vehicle (NEV) policy, urging the government to amend it to safeguard the local auto industry from potential harm.

In a letter addressed to the Engineering Development Board (EDB), PAMA warned that the policy could lead to an unchecked import of Complete Built-Up (CBU) vehicles, which may undermine domestic Original Equipment Manufacturers (OEMs) and growth of local auto part suppliers.

Abdul Waheed Khan, Director General of PAMA, expressed apprehension that the policy’s provisions, particularly the lower duties and sales taxes on CBU imports (25 percent duty and 10 percent sales tax), would create an non-level playing field for local manufacturers. He emphasized that such a policy would erode the market share of domestic producers and discourage future investments in the local auto sector, ultimately disrupting the objectives set by successive auto policies since 2008. “The introduction of these provisions would significantly slow down investment in the local auto sector, frustrating the goals of AIDEP 2021-26, which aims to promote a balanced tariff structure for various vehicle types,” Khan wrote in the letter.

PAMA suggested a comprehensive review of the policy, proposing that the government ensure its alignment with the AIDEP framework to promote sustainable growth in the auto industry. Among the key recommendations, PAMA called for the elimination of the used car import facility, citing that the current volume of used car imports already takes away nearly 30% of the market share. The association urged that the import of used cars be entirely banned, with an exception for overseas Pakistanis purchasing locally produced cars.

Additionally, PAMA proposed that the NEV policy should focus exclusively on Electric and Fuel Cell Vehicles, with Hybrid Electric Vehicles (HEVs) and Plug-in Hybrid Electric Vehicles (PHEVs) continuing to be covered under the existing AIDEP framework.