What Benefits Will Pakistan’s New Auto Policy Bring?

Hasnain
May 25, 2016

Recently, Government of Pakistan has finally come up with a new auto policy after a gap of 3 years.  The policy will remain active for the next 5 years and already approved by the Economic Coordination Committee. The new policy aims to boost foreign investment and attract new auto manufacturers to the local market increase competition to bring lower priced cars with better quality and features to benefit the consumer as well as multiply employment opportunities in Pakistan. This will be possible due to various incentives given to new automakers entering the Pakistani market.

Now let’s take a look at what this new policy brings to the table and what benefits can consumers and Pakistan’s economy in general can hope to get from its implementation. We’ve listed these benefits below:

Foreign car manufacturers will be able to import machinery to set up their assembly plants without paying any duty up to 3 years. This will boost competition between currently established manufacturers and the new entrants which will in turn bring costs down for the consumer.

Best of all, consumers will benefit from reduced prices on cars due to stiffer competition as well as get better levels of quality and more options by default as is the norm for international brands. It also means good news for those who are looking to finance a car as they’ll have more choice instead of having to resort to getting used Japanese cars in which there is always a doubt about them being accidental or not.

Currently, auto manufacturers in Pakistan skimp on many features and cars being offered here are basically stripped out and discontinued versions which aren’t sold elsewhere in the world. Essential safety features such as rear seat belts, airbags, anti-lock braking systems and compliance with the latest emission standards are nowhere to be found. New entrants in the market will hopefully bring these features in their offerings which will ensure that other manufacturers follow suit and thus the safety and protection of the consumer and environment will be ensured.

There will be a huge opportunity for employment as international players enter the market and thus local human resource will get quality training and work under better and more competitive environments.

According to the new auto policy, custom duty on completely knock down unit has been reduced from 32.5% to 30%. Import duty would be 10% for non-localized parts and 25% for the localized parts. All the parts for less than 800cc cars would be at 10%. These rates will be applicable till the duration of 4 years.

New technology will be implemented in the cars including better instrument cluster panels, LED lights, Cruise control and lane management systems, parking sensors etc.

It’s high time we introduce international manufacturers to the mix because  where our neighbor India has dozens of different automotive manufacturers, we are still stuck under the dominance and monopoly of basically three car manufacturers. This auto policy could also bring back previously shut down companies like Nissan, Kia, Fiat and Hyundai etc. Smaller brands like FAW could also get a better environment to compete. Hence the new auto policy could be crucial in breaking monopolies and enabling customer to have more, safer and better choices in terms of vehicles.  Now the question remains is how existing manufacturers would react to this policy as their attitude would determine the sustainability of the policy as well.  We hope that everything turns out for good as it’ll benefit stakeholders and consumers alike and will boost the economy of our country too.

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