Automobile assemblers are concerned over rumours of age limit for imported used cars being relaxed from three to five years and the pressure from the government to localise car components under the Auto Industry Development Plan (AIDP).

The assemblers have been urging the government to devise a strategy that will support the development of the domestic auto sector and help reduce vehicle production cost, said Shafique Sheikh spokesperson Pak Suzuki.

The auto industry needs official support to achieve economies of scale and therefore urges the government to provide a stable policy framework so that the industry can plan effectively for new models and plant capacity expansions, he said.

“The assemblers will halt future and current investments, if the government relaxes age limit on import of second hand cars,” Shafique said.

The Trade Policy 2010/11 is due shortly and the auto industry is hearing about allowance of used vehicle imports on a larger scale. Increasing the age allowance will let more depreciated cars into the country, said Raza Ansari, Director Marketing, Indus Motor Company.

If the government can reduce duty on depreciated cars, then why not on the parts imported for local manufacturing. Current duty on car assembling components or the complete knocked down kits (CKD) is 32.5 percent. If this is decreased it can be passed on to consumer. This would then increase sales, increase jobs and ultimately increase the amount of tax collection. Everyone will benefit, he said.

The auto industry is certainly in favour of localisation if this offers high-tech parts of competitive quality at a cheaper price, which would help cut their manufacturing cost, enabling them to pass on this benefit to the consumer by reducing prices, he said.