IMC explores commercial import of used cars

Karachi: Indus Motor Company (IMC), the local assembler of Toyota vehicles, has expressed interest in the commercial import of used cars, a move that aligns with Pakistan’s recently implemented legal framework.

IMC has reached out to the Engineering Development Board (EDB) seeking clarity on procedural and compliance requirements to initiate imports under the new policy introduced through SRO 1895(I)/2025 on June 30, 2025, which permits commercial import of used vehicles under specified HS codes.

IMC emphasised that its core priority remains sustaining and expanding local CKD (Completely Knocked Down) vehicle manufacturing, which significantly contributes to local employment, industrial localisation, and national value addition. However, given the current regulatory allowances, the company is prepared, though reluctantly, to explore used vehicle imports.

IMC highlighted its extensive support infrastructure comprising 58 dealerships nationwide staffed with trained technicians, ensuring quality aftersales service for imported vehicles. The context for this corporate step is a government move to liberalise used car imports, a decision partly influenced by IMF conditions attached to a broader financial assistance package.

The Ministry of Commerce’s notification now allows imports of used vehicles, but these are subject to a 40 per cent regulatory duty in addition to standard customs duties, along with compliance to safety and environmental certifications facilitated by EDB.

Used car imports have surged dramatically, with approximately 40,000-45,000 units entering Pakistan annually as of the fiscal year 2024-25, accounting for nearly 25-30 per cent of the total automobile market share.

In July 2025 alone, 4,423 units were imported, reportedly translating into an estimated Rs6.5 billion loss for local vendors. These figures represent a substantial increase compared to prior years, suffusing significant competition for domestically assembled vehicles.

This rise is driven by imports under various schemes that were originally designed for overseas Pakistanis, personal baggage, gift, and transfer of residence schemes, yet have become exploited as commercial import channels.

Mashood Ali Khan, director at SMEDA and an expert in the auto sector, cautioned that the unchecked import of used vehicles under the guise of promoting electric mobility poses a serious threat to Pakistan’s local manufacturing base. He explained that each imported unit directly replaces a locally assembled one, weakening domestic production and undermining efforts to establish a sustainable auto industry. “This shift towards imported CKD kits and used electric vehicles may provide short-term consumer relief,” he noted, “but it comes at the cost of industrial jobs, technology transfer, and long-term economic stability.”

Khan emphasised that an import-driven approach would erode Pakistan’s existing supply chain and discourage new investment in local assembly and parts manufacturing. He urged policymakers to strike a balance between consumer incentives and industrial support, arguing that “true progress in electric mobility cannot come from imports alone.”

Instead, he called for the development of a structured framework to support local manufacturing, establish testing and certification facilities, and introduce EV technology funds for small and medium enterprises to ensure the transition strengthens, rather than weakens, the national economy.

Indus Motor and other domestic manufacturers currently operate with around 500,000 units of combined production capacity annually, but utilisation remains low at approximately 36 per cent, with much capacity idle. The influx of used cars exacerbates this underutilisation, suppresses employment growth potential, and dampens investor confidence in local industry prospects.

The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has been vocal about the adverse effects of used car imports on local industry. PAAPAM has described the persistent inflow of used cars as causing long-term economic harm by draining foreign exchange reserves, displacing local jobs, and reducing tax revenues from domestic manufacturing.

Indus Motor has consistently voiced concerns about unchecked used car imports. Company leadership has linked growing imports to deteriorating conditions for local assemblers and suppliers, stressing that local production is crucially tied to foreign exchange preservation and job creation. The company has urged the government to enforce policies that prioritise local automotive growth rather than permit policies facilitating parallel used car imports.

For the industry to flourish, experts emphasise the need for policy consistency, incentives for localisation, and measures to address structural issues such as high operating costs and tax burdens on local manufacturers.