Table of Contents

S.No Description Page No.

1 Glossary & Abbreviations 2

2 Executive Summary 4

3 Introduction 7

4 History & Key Players 7

5 Methodology 10

6 Statistical Analysis 11

7 Production data analysis 11

7 Import data analysis 12

8 Tariff analysis 16

9 Tariff Structure 16

10 Policy on Import of used cars (Pakistan Experience) 19

11 Requirements for Import of used cars 19

12 Process of Import and issues 20

13 Method of Sale & Purchase of Used Cars 21

15 Issues of Consumers 22

14 Policy of regional countries on used cars 23

15 Conclusion 26

15 Recommendations 28

16 Annexures 29

2
 GLOSSARY & ABBREVIATIONS

ACD Auto Cluster Development

AIDP Auto Industry Development Plan
AIP Auto Industry Policy
AMC Adam Motor Co Ltd
APM Auto Parts Manufacturers
CBU Completely Built-up
CCoP Competition Commission of Pakistan
CIAR Competitive Impact Assessment Report
CKD Completely Knocked Down
CNG Compressed Natural Gas
EDB Engineering Development Board
EPB Export Promotion Bureau
ERP Effective Rate of Protection
FAW First Automobile Works, China
FBR Federal Board of Revenue
FDI Foreign Direct Investment
FED Federal Excise Duty
GoP Government of Pakistan
HACPL Honda Atlas Cars Ltd
HCV Heavy Commercial Vehicle
HEV Hybrid Electric Vehicle
IMC Indus Motor Co. Ltd
JETRO Japan External Trade Organization
JPY Japanese Yen
KOTRA Korea Trade Promotion Agency
LCV Light Commercial Vehicles
NTC National Tariff Commission
OEM Original Equipment Manufacturers
PAAPAM Pakistan Association of Automotive Parts & Accessories Manufacturers
PAII Productive Asset Investment Incentive
PAMA Pakistan Automobile Manufacturers Association
PIDE Pakistan Institute of Development Economics
PKR Pakistan Rupee
PSMC Pak Suzuki Motor Co. Ltd
PSQCA Pakistan Standards & Quality Control Authority
RD Regulatory Duty
SED Special Excise Duty
SKD Semi Knocked Down
SMEDA Small and Medium Enterprise Development Authority
SRB Sindh Revenue Board
TASS Technology Acquisition Support Scheme
TDAP Trade Development Authority of Pakistan
TPS Toyota Production System
TR Transfer of Residence
UNIDO United National Industrial Development Organization
USD United States Dollar
WHT Withholding Tax

3
 EXECUTIVE SUMMARY

Auto industry is referred to as “industry of industries” in the developed world. Pakistan is among

the select few group of 40 countries who manufacture automobiles. The auto industry of many

regional countries has played a pivotal role in transforming those countries into economic tigers.

Unfortunately the pace of this happening in Pakistan has been very slow. There are multiple

factors contributing to this issue. This study has tried to find out why this has happened and what

are the main problems that if solved can turn the country around. It has been time and again

emphasized on various forums by many leading economists and by the OEMs/assemblers that

the auto industry protection level must brought at par with our regional countries and that

rampant and unbridled import of used cars through gross misuse of government schemes is also

creating hurdles in the overall growth of this sector. A detailed analysis was carried out where

the production data of Pakistani manufacturers, import data of chapter 87 (vehicles other than

train and tramway) was observed. The policy and process of import of used cars was also

analyzed along with its weaknesses and it was compared with the import policy of used cars of

regional countries that included India, Thailand, Malaysia, Indonesia and Vietnam. Analysis of

tariff structure of Pakistan for auto industry was also analyzed to see if it is rationalized or it

needs to be revised.

It was observed that auto sector is among the top 5 contributors to Pakistan’s tax revenues and

has skilled work force of 3 million. Different global vehicle brands are operating in the Pakistani

Market and all 5 sub-sectors of auto industry are being locally produced that include passenger

cars, light commercial vehicles, tractors, buses, motorcycles and trucks. The production data

analysis of all the subsectors revealed that the growth of production has remained negative over

the period of 2006-07 to 2013-14. At the same time the imports of Pakistan in auto industry has

4
increased, which shows inverse relationship between production of domestic vehicles and parts

and import of vehicles and auto parts.

Analysis of import policy of used cars and the policy’s comparison with regional countries

revealed that in Pakistan this policy which is meant for expatriates only is being grossly misused.

Even though Pakistan has banned commercial import of used vehicles but it is happening. The

reason is that unlike regional countries Pakistan has weak system to ensure that policy of

Transfer of residence and gift & baggage schemes are not misused. There are no technical

barriers or standards being applied by Pakistan that these schemes are not misused. There is no

auto policy in the country also to implement safety and quality standards for local manufacturers

and imported vehicles, which is required on the earliest.

The business of used cars is completely un-documented in Pakistan. Hence there is no income

tax collected on sale of used vehicles. The 10 big bulk importers of used vehicles in Pakistan

hold public auctions where used car dealers and individual buyers purchase these cars against

payments through cash or grey bank accounts. Assuming average sales value of Rs 1.5 million

per unit and import of 36,000 vehicles per year, the undocumented trade of Used Cars amounts

to creation of a black economy in the country worth a staggering Rs 54 billion per annum

Tariff structure analysis also revealed that the Auto sector tariff has been decreasing over time

and does not needs to be decreased (CBU) any further whereas in case of auto parts it needs to be

increased. In light of the findings following recommendations were made:

 The maximum age of Used Cars, Vans, Mini Vans, SUV, 4x4 Vehicles & Light
Commercial Vehicles should be restricted to 3 years. This shall cover all HS Codes under
Chapter 87.03, HS Code 8704.2190 & HS Code 8704.3190

 A uniform system of customs valuation should be adopted for used vehicle regardless of
whether it is below and above 1800cc engine capacity. Fixed duties under SRO 577 to be
replaced by customs valuation on the basis of ITP (Import Trade Price) and MSRP

5
 (Manufacturer Suggested Retail Price). SRO 577 shall be abolished which will lead to
increase in government revenue by rupees 7.6 billion.

 Gift / Baggage schemes should be abolished only Transfer of residence scheme should be
allowed

 Import of Used Vehicles under any scheme should only be allowed from the country in
which the Passport Holder has been residing.

 Import under TR, Gift or Baggage scheme should be restricted to maximum of one
vehicle per passport for a period of at least 2 years. It should be strictly administered to
stop misuse of this facility.

 A compulsory clause may be included in TR, Gift or Baggage scheme that the used
vehicle must be registered in name of expatriate Pakistani importer (or his immediate
family) and should be non-transferable for a period of at least 1 year from the year in
which it is imported (practiced policy in Thailand)

 To ensure road worthiness of imported vehicles on same pattern as adopted by other

regional governments, there shall be mandatory Preshipment inspection of Used Vehicle
(through a recognized Preshipment Agency such as Bureau Veritas OR Japan Auto
Appraisal Institute – JAAI). A template of the inspection criteria and certificate
containing information required from Bureau Veritas / JAAI is elaborated in Annexure E

 To protect consumers, only those vehicles shall be importable into Pakistan, which are
certified by Preshipment Agency as follows:

o Japanese Auction House grading of 4.5 or above

o Odometer Mileage should be below 15,000 km

o Vehicle should not be stolen

o Vehicle body or interior should not be rusted

o Vehicle should have no damage from water flooding

o Vehicle should not have any accident marks on the Chassis

o Vehicle should be usable and road worthy

 Auto industry development plan must be implemented in letter and spirit.

 Usage of smuggled vehicles and non custom paid vehicles should not be allowed to use
anywhere in Pakistan.

 National Auto policy should be implemented to ensure quality, safety & road-worthiness
of used and old cars. Car older than 15 years old should not be allowed to come on road.

6
INTRODUCTION
BRIEF HISTORY AND KEY PLAYERS

Automobile industry of the world has successfully emerged as a leader in production and

manufacturing activity, generation of employment and contribution to global GDP both directly

and indirectly. Around the world, automakers have specialized in cost effective mass production

techniques catering to increasing global demand of vehicles. Pakistani auto industry is also

striving to follow suit of global trends provided domestic demand of locally produced vehicles

also experiences a growing trend, since this industry is a buyer-driven market. Pakistan is among

the group of 40 countries in the world that produce automobiles. Pakistan with its booming

population of 180 million and 9th largest labor force has a huge potential to grow and achieve

economic prosperity with right and focused policies for its economy. The auto industry of

Pakistan has been playing a pivotal role in development of the country’s economy. It has been

accelerating with a mission of achieving efficiency and improving the quality of its product. It is

already contributing to revenue generation, earning of foreign exchange, development of human

resource and transfer of technology from more advanced countries to Pakistan. It is currently

employing around 3 million skilled and semi-skilled professionals in Pakistan. Pakistani auto

manufacturers are producing all kinds of vehicles that include; motor cars, buses, trucks, Light

Commercial Vehicles (LCVs), tractors, prime-movers and 2/3 wheelers .

In 1950, National Motors Limited (NML) a public limited company was established by General

Motors of USA in Pakistan. This was the first company established in Pakistan for

manufacturing of commercial and passenger vehicles and it became operational in 1953. This

was the start of auto-industry in Pakistan and thereon this industry passed through different

stages of evolution. The industry operated under private sector in 1960s achieving a level of 20%

indigenization. In 1970s government perused a policy of nationalization and to its effect a public

7
company with the name of Pakistan Automobile Corporation (PACO) was established. In 1980s

and onwards privatization policy reemerged and private sector again entered this industry.

Different auto-manufacturers entered that included Suzuki, Toyota, Honda, Hyundai, Kia,

Daihatsu, Nissan, Fiat, Adam Revo, Proton and Chevrolet etc. Major assemblers/manufacturers

in Pakistan include Pak Suzuki Motors Limited, Karachi, Indus Motor Company Limited,

Karachi and Honda Atlas Cars Limited, Lahore. Manufacturers/assemblers smaller in size than

these three big companies mentioned above include Deewan Farooq Motors (Hyundai, Kia),

Nexus Automobiles Pvt Ltd (Chevrolet), Adam Motor Co Ltd (Revo), Raja Auto Cars Ltd (Fiat)

and Gandhara Nissan Limited (Nissan). These 5 smaller Assemblers have closed down

manufacturing currently in Pakistan due to stiff competition, stagnant economy, inflation and

low demand faced by their brand of vehicles due to extensive import and smuggling of used cars.

Pakistan is amongst the very few countries which manufacture automobiles. As mentioned above

international brands are locally producing vehicles that include motorcycles, passenger cars,

tractors, LCVs, buses and trucks. Auto parts used in assembly of these vehicles are also locally

produced. According to figures shared by PAAPAM around 70% of vehicle parts are being

domestically produced depending on the type of vehicle.

Unfortunately there is no auto policy being followed in the country. There are few laws and

motor vehicle acts that ensure the quality of vehicles being driven on the roads. Two main legal

laws are Motor Vehicles Ordinance (MVO) 1965 and Motor Vehicle Rules (MVR) 1969 that

essentially deal with the issue and renewal of certificate of fitness of vehicles, body construction,

essential equipment and requirements for the maintenance of a motor vehicle. The main

emphasis of these laws is on the maintenance of vehicles and they stress more on factors that

8
cater to environmental aspects and pollution. There is no testing and certification system and

policy which ensures that only fit to travel vehicles are allowed on the roads

Too many old and un-maintained vehicles along with growing numbers of used

imported/smuggled cars is an increasing burden on the economy and is a safety hazard. In recent

past, several accidents on Motorways & Highways that have resulted in hundreds of fatalities are

seen as a direct result of lack of regulations vis-à-vis vehicle safety & maintenance. Without any

clear policy to control these issues the industry cannot flourish. The auto-industry of Pakistan

cannot be in a position to compete internationally without the institutionalization of strong

standards within the country. Hence, there is an urgent requirement to develop and implement an

auto policy in Pakistan.

Auto industry of many countries like Japan, Korea, Thailand, Malaysia, China, Indonesia, India,

Brazil and Vietnam has played a pivotal role in over all industrialization and economic growth of

these countries. It has attracted both local and foreign investment and raised the technological

infrastructure of these countries. These countries have supported their auto industry with multi-

pronged strategies. They have ensured that they are given hundred percent access to domestic

market by discouraging import/smuggling of used vehicles and have implemented long term

policies for continuity and stability. Unfortunately in Pakistan this has not been the case. The

reasons of this failure as quoted by the Pakistani manufacturing associations on various forums

include stagnant economy, high inflation, terrorism and uncontrolled law and order situation,

inconsistent government policies and unbridled import and smuggling of used cars.

Under the present government, the economy has started showing signs of improvement.

Inflation & interest rates are going down, issue of terrorism and law & order is being solved on

high priority and government is taking extensive measures to support private sector of Pakistan

9
to play its role in growth and development of the country. However, the issue of import of used

cars, still remains to be tackled properly. During last decade, approximately 250,000 used

vehicles have been imported in the country, capturing significant part of market. This has lead to

the closure of domestic plants such as Hyundai, Nissan, Chevrolet, Fiat & Adam. This report has

tried to analyze this issue and recommend policies to the government for its control.

METHODOLOGY

Production data of all 5 sub-sectors of vehicles will be analyzed. Present import tariff structure

and process and policy of import of used cars will be analyzed. The experience of regional

countries will be used to study how Pakistan can learn from their experience.

10
 STATISTICAL ANALYSIS

PRODUCTION DATA ANALYSIS:

The production data of auto sector in all sub-sectors of cars, trucks, buses, LCVs, farms tractor

and motorcycles is analyzed in the following paragraphs.

Table:1 The production data of auto sector from 2004-2014:

Vehicles 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14

Cars 133,722 170,487 176,016 164,710 84,308 121,647 133,972 154,255 120,332 116,281

Trucks 3,204 4,518 4,410 4,993 3,135 3,425 2,901 2,597 1,923 2,674

Bus 1,762 825 993 1,146 662 628 490 568 522 558

Jeep & LCV 1,564 2,472 3,298 1,590 932 1,172 883 451 1,475 1,217

(4*4)

Pick-up/LCV 16,294 19,152 19,672 21,354 16,160 15,768 19,142 20,929 14,517 17,477

Farm Tractor 43,200 48,887 54,098 53,256 59,968 71,607 70,770 48,120 50,859 34,521

Motor cycles 416,189 520,124 467,267 660,593 509,054 736,861 838,665 828,576 819,556 771,507

(Source: PAMA)

11
 (Graph:1 production data of auto sector from 2004-2014 source PAMA)

Production data from 2004 to 2014 indicates that auto industry production over the period of last

five years has largely remained stagnant and showing an overall decreasing trend (complete list

of data is annexed with this study as Annex: A).

IMPORT DATA ANALYSIS

Further analysis of top imports of Pakistan in auto industry can highlight the trend in imports of

auto sector i.e. chapter 87 (Vehicles other than railway, tramway) which is given below in table:

2.

Table: 2 Pakistan top 20 imports in chapter 87 from 2009-13 in US $ thousand

Product Product label Pakistan's imports from world

code 2009 2010 2011 2012 2013
'870321 Automobiles w reciprocatg piston 113737 188793 262970 290441 206743
engine displacg not more than 1000 cc

12
'870322 Automobiles w reciprocatg piston 203498 285784 361866 400407 196831
engine displacg > 1000 cc to 1500 cc
'870323 Automobiles w reciprocatg piston 63594 116592 117635 151282 164779
engine displacg > 1500 cc to 3000 cc
'870829 Parts and accessories of bodies nes for 28773 36960 84723 74695 88909
motor vehicles
'870333 Automobiles with diesel engine 2464 889 1552 13873 78409
displacing more than 2500 cc
'871120 Motorcycles with reciprocatg piston 46446 73351 84819 81309 78042
engine displacg > 50 cc to 250 cc
'870421 Diesel powered trucks with a GVW not 34581 56933 66204 79106 53446
exceeding five tones
'870899 Motor vehicle parts nes 58081 65171 52552 60022 50582
'871410 Parts and accessories of motorcycles, 0 0 0 39153 47531
incl. mopeds, n.e.s.
'870210 Diesel powered buses with a seating 25738 29292 28481 51621 38711
capacity of > nine persons
'870324 Automobiles with reciprocating piston 9043 13436 11961 30588 36346
engine displacing > 3000 cc
'870422 Diesel powerd trucks w a GVW exc five 36010 31095 25020 28803 28258
tonnes but not exc twenty tonnes
'870590 Special purpose motor vehicles nes 74087 72367 101544 39976 24432
'870431 Gas powered trucks with a GVW not 9652 19636 26272 35408 22674
exceeding five tones
'870120 Road tractors for semi-trailers (truck 13793 33414 6503 14629 19109
tractors)
'870190 Wheeled tractors nes 77257 101289 59717 37983 18422
'870290 Buses with a seating capacity of more 7406 3213 20142 39132 10285
than nine persons nes
'870410 Dump trucks designed for off-highway 8942 2389 7199 7005 8411
use
'870880 Shock absorbers for motor vehicles 12569 18920 14687 14702 8235
'870540 Mobile concrete mixers 3298 1168 1045 2405 6288

(calculations done by author based on latest data of trademap and uncomtrade)

Graph:2 Trend of top 6 imports of chapter 87 by Pakistan from 2009-13

13
Analysis of top imports of Pakistan, in chapter 87, highlight that there is an overall increasing

trend (complete list of data is annexed to this study as Annex:B). Imports of automobiles of

engine power less than 1000cc increased from US $ 113 million to around US $ 206 million

from 2009 to 2013. Imports of automobiles of engine power more than 1000cc upto 1500cc

marginally decreased from US $203 million to US $196 million. Automobiles of engine power

of more than 1500cc up to 3000cc increased from US $ 63 million to US $ 164 million so on.

Almost all of the top 20 imports of Pakistan in chapter 87 have registered increase in period from

2009 to 2013.

These two data analysis indicate that factor of rampant import of automobiles as highlighted by

PAMA & PAAPAM has significance. It can be observed that the production of automobiles by

14
Pakistani manufacturers has been showing a decreasing trend at the same time imports of

automobiles have registered growth in the same period.

15
TARIFF ANALYSIS
TARIFF STRUCTURE:

The maximum rate of customs duty for import of vehicles is 150% (100% CD and 50% RD)

while tariff on raw materials, inputs, sub assemblies and CKD kits ranges from 0 to 32.5 %.

Table 3 below highlights the tariff structure on passenger cars:

Table 3: Tariff profile over the years for cars and its parts

Customs Duty Rate (%) on Import of:

Year
CBU Raw mats/Parts by OEMs Parts by Importers

2003-04 75-150 5-25 25.00

2004-05 50-100 0-35 35.00

2005-06 50-100 0-32.5 35.00

2009-10 50-150* 0-32.5 52.50#

2010-11 50-150* 0-32.5 52.50#

2011-12 50-150* 0-32.5 52.50#

2012-13 50-150* 0-32.5 52.50#

* RD @ 50% on cars/jeeps of above 1800cc vide SRO 482(I)/2009

# Additional customs duty @ 17.5% vide SRO 693(I)/2006
Table 4 below highlights the change in duty for Cars OEM industry

Year Customs Duty Rate on: Differential between CBU and

CKD kits

Imported local CKD

CBU CKD kit kit Imported CKD Local parts/CKD

2003-04 75-150 35 50 50-115 25-100

2004-05 50-100 35 50 15-65 0-50

16
 2005-06 50-100 35 50 15-65 0-50

2009-10 50-150 32.5 50 17.5-117.5 0-100

2010-11 50-150 32.5 50 17.5-117.5 0-100

2011-12 50-150 32.5 50 17.5-117.5 0-100

2012-13 50-150 32.5 50 17.5-117.5 0-100

(Source FBR)

It is evident from the tables above that the protection rate provided to passenger cars and the rate

of duty has decreased over time and is at par with regional countries (comparison will follow

later). Tariff rates applied for Vendor industry can be seen below in table 5:

Year Parts for OEMs Customs Duty on Raw materials for vendors (%)
(%)

Raw
materials Sub-components Components Sub-assemblies

2004-05 5-25 5 10 10 35

2005-06 0-35 0 5 10 20

2009-10 0-32.5 0 5 10 20

2010-11 0-32.5 0 5 10 20

2011-12 0-32.5 0 5 10 20

20012-13 0-32.5 0 5 10 20

(Source FBR)

Table 5 clearly shows that protection for vendor industry also has decreased over time or kept at

a minimum value.

17
Over the years rate of duty applied for passenger cars can be seen in the table below to highlight

its decreasing trend over time.

Year Maximum Tariff on Cars

1990-91 435%

1995-96 265%

1999-00 225%

2004-05 100%

2005-06 100%

2009-10 150%*

2012-13 150%*

(* RD @ 50% on cars/jeeps of above 1800cc vide SRO 482(I)/2009 source FBR)

18
 POLICY ON IMPORT OF USED CARS & ISSUES (PAKISTAN

EXPERIENCE):

In Pakistan, 3,000 Used Cars are being imported per month on average and this is causing

revenue losses of Rs 10.8 Billion to Auto Parts Manufacturers of Pakistan. The fixed duties on

Used Cars applied in US Dollars under SRO577 are highly suppressed. As a result, on average,

the GoP is losing revenues of Rs 210,000 per vehicle below 1000cc engine capacity. Assuming

import of 3,000 vehicles per month, this amounts to a staggering revenue loss of Rs 7.6 billion

per annum to the Government. As a matter of policy, Government of Pakistan does not allow

import of used vehicles for commercial purposes (Import policy order appendix C serial 10

annexed as Annexure D). Used vehicles are only allowed to facilitate expatriate Pakistanis under

Transfer of Residence (TR) and Gift & Baggage schemes. The vehicles imported through these

schemes are meant for use of expatriate and their family.

REQUIREMENTS FOR IMPORT OF USED VEHICLES:

SR. GIFT SCHEME TRANSFER OF RESIDENCE PERSONAL BAGGAGE

NO SCHEME
1 Stay abroad 700 days in last three years Stay abroad 700 days in last three Stay abroad 180 days in
years last seven months
2 Attested copy of passport and Pakistan Attested copy of passport and Attested copy of passport
origin card Pakistan origin card and Pakistan origin card
3 Vehicle not more than 3 years old Vehicle not more than 3 years old Vehicle not more than 3
years old
4 Registration book Registration book Registration book
5 Purchase Receipt Purchase Receipt Purchase Receipt
6 Original copy of bill of lading Original copy of bill of lading Original copy of bill of
lading
7 CNIC of Donee ---------------- ---------------------

19
8 Vehicles can be gifted to a family Bill of lading dated not later than Bill of lading dated not
member normally resident in Pakistan:- 120 days from the date of arrival later than 120 days from
i. Parents to adult children. of applicant. the date of arrival of
ii. Adult children to parents. applicant.
iii. Husband to wife.
iv. Wife to Husband
v. Brother to sister vice versa.

Duties charged are on the following rates:

i. Up to 800cc: US $ 4800/-

ii. 801cc to 1000cc: US $ 6000/-

iii. 1001cc to 1300cc: US $ 12000/-

iv. 1301cc to 1500cc: US $ 16900/-

v. 1501cc to 1600cc: US $ 20500/-

vi. 1601cc to 1800cc (Excluding Jeeps): US $ 25400/-

Depreciation calculated is @1% per month (Maximum up to 36% ), from the date of first

registration of vehicles abroad to the date of its entry into Pakistan. Excise and sales tax is

included in fixed tariff.

For vehicles having engine power above 1800cc a luxury tax is imposed @ 50% ad-val basis.

There are no non-tariff barriers employed by Government of Pakistan on used vehicles.

PROCESS OF IMPORT AND ISSUES

Unfortunately, the schemes mentioned above are specifically for expatriate Pakistanis but are

being used as a defacto import of used vehicles for commercial purposes. The process of import

of used cars in Pakistan is given below:

20
  Pakistanis abroad engaged in used car business are registered with different used car

auction houses.

 Importers of used cars in Pakistan have linkages with these Pakistanis abroad.

 Pakistani importers of used cars send their requirement to these auction house registered

Pakistanis abroad to place bids at auction houses.

 After the bid is accepted, the payment request is given to registered users by auction

house, who then receive the required amount from Pakistani importers.

 Pakistani importers than provide a copy of Pakistani passport holders (who have lived

abroad) under whose name the car is shipped to Pakistan through Gift/TR/Baggage

schemes.

 Many cars are imported through a single passport and the passport holder in not the

actual recipient of these imported used cars.

 These importers then transfer these cars to used car dealers and are sold to individual

consumers

METHOD OF SALE & PURCHASE OF USED CARS

The business of used cars is completely un-documented in Pakistan. Hence there is no income

tax collected on sale of used vehicles. All the transaction carried out for purchase of these cars is

on cash basis. There are around 10 big bulk importers of used vehicles in Pakistan. These

importers hold public auctions where used car dealers and individual buyers purchase these cars

against payments through cash or grey bank accounts. Assuming average sales value of Rs 1.5

million per unit and import of 36,000 vehicles per year, the undocumented trade of Used Cars

amounts to creation of a black economy in the country worth a staggering Rs 54 billion per

annum

21
ISSUES OF CONSUMERS:

Since these cars are loaded with various features including ABS brakes, power steering, air bags

etc they are considered a very attractive and cost effective option a number of issues are faced by

the buyers of these cars, which include:

 Lack of uniform price or quality.

 Consumers are unaware of the rating of the car at which it has been auctioned in Japanese

auction houses, whether it was accidental or not.

 The meters of the cars are most of the times tampered showing lesser mileage which is a

crime and tantamount to deception and fraud.

 There after sale services are non-existent and most of the tines cars are left at the mercy

of un skilled technicians for service and repairs.

 The availability of spare parts at fixed prices and on the spot is non-existent in most of

the cases where parts are imported from Japan or any other country for that matter at a

very high price.

 The make and design of these cars is according to the conditions of the country where

they were manufactured and when used in Pakistan most of the parts deteriorate very

early causing high maintenance costs.

22
TARIFF AND POLICY OF REGIONAL COUNTRIES ON USED CARS
(REGIONAL COUNTRY EXPERIENCE):
INDIA:

India uses a tariff of 100% on vehicles imported into India. There is no custom duty discount

provided on import of used cars. Maximum 3 years old car can be imported into India.

Commercial import of used vehicles is also not allowed in India as well. It is allowed for

expatriate Indians under Transfer of residence schemes and vehicle registration in the name of

the importer for 1 year.

Different taxes are employed by Indian government in ambit of Excise/Sales tax. India applies a

value added tax of 12.5%, excise tax of 16.5%. Other para-tariff are also applied by India on

import of used cars like CVD of 16%, SCVD of 4% and education cess of 3%. India does not

apply a luxury tax like Pakistan.

Different non-tariff barriers are used by India that include:

 Only import of right hand drive vehicles allowed.

 Speedometer has to be in Km/h.

 Submission of certificate of conformance to India motor vehicle act.

 Confirmation to original homologation certificate issued at registration

 Importer has to obtain approval from the Indian testing agency.

THAILAND:

Tariff applied by Thailand is of 80% on import of used vehicles. Custom duty discount is not

applicable in Thailand and Thailand does not apply an age limit on imported used vehicles.

Thailand also does not allow import of used cars for commercial purposes.

23
Import of used vehicles is allowed for foreigner living in Thailand for more than a year. The car

registration has to be in the name of the user for at least one year. Thai residents have to own

vehicle abroad for 1.5 years with a driving license. Thailand applies excise/sales tax at 75-90 of

76% of retail price. Like India, Thailand also does not have luxury tax on imported used

vehicles.

Used vehicles are restricted good in Thailand and permit has to be taken from Ministry of

Commerce for importing used vehicle. Exhaust emission test has to be taken from office of

environment protection to drive the imported used vehicle in Thailand.

INDONESIA:

Tariff rates applied by Indonesia on vehicles range from 45% to 50%. Indonesia also does not

apply custom duty discount and age limit on import of used vehicles. The commercial import of

used vehicles is not allowed in Indonesia.

Import of used vehicles is banned in Indonesia it is allowed to expats living in the country and

can import from their licence of residence. Indonesia does not apply any excise or sales tax but

applies a luxury tax ranging from 10% to 75%.

MALAYSIA:

Malaysia applies a tariff of 30% on import of vehicles without any custom duty discount.

Maximum age limit for an imported used vehicle is 5 years. It also does not allow commercial

import of used vehicles. Expatriates and student overseas are allowed to import used vehicles

from native country. Vehicle should be registered in the name of the importing user and import is

allowed only through company franchises, and no individuals are allowed to import.

24
Malaysia has a system of permit/quota for importing used vehicles. An approved permit

system/quota is authorized by Ministry of Trade and Industry of Malaysia. Following non-tariff

barriers are applied by Malaysia:

 Car in excess of 6 years old has to be verified and approved by Ministry of trade and

industries.

 Before importing a permit from the Malaysian road transport department has to be taken.

 A National Auto Policy is in place in Malaysia since June 2011under which used

components and parts of vehicles are banned from import.

 Under the same policy initiative mechanism has been envisaged to introduce life of

vehicle policy aged to 15 years.

VIETNAM:

Vietnam applies an import duty on vehicles ranging from 77% to 83% but does not apply custom

duty discount. Maximum age limit for used imported vehicles is 5 years. It also does not allow

import of used vehicles for commercial purposes. Only Vietnamese sent by government in

foreign countries for at least three years are allowed to import used vehicles back in Vietnam.

Vietnam applies excise/sales tax ranging from 45% to 60% but does not apply any luxury tax.

For importing a used vehicle in Vietnam following two conditions have to be met:

 The car’s engine must be able to use unleaded petroleum.

 A written request for import certified by the local authority or competent agency has to

be taken.

25
CONCLUSION
Pakistan is among the group of 40 countries in the world that produce automobiles. Pakistan with

its booming population of 180 million and 9th largest labor force has a huge potential to grow and

achieve economic prosperity with right and focused policies for its economy. The auto industry

in Pakistan is producing all kinds of vehicles that include; motor cars, buses, trucks, Light

Commercial Vehicles (LCVs), tractors, prime-movers and 2/3 wheelers. If it is given hundred

percent access to domestic market by discouraging import/smuggling of used vehicles and a long

term policies for continuity and stability is implemented it can also perform like the auto

industries of regional countries. The auto-industry of Pakistan cannot be in a position to compete

internationally without the institutionalization of strong auto industry focused policy with in the

country. Import of Used Articles into automobile manufacturing country causes huge damage to

the domestic industry. It leads to lack of investment in industrial infrastructure of the country and

hampers creation of employment opportunities, economic growth and generation tax revenues

for the government.

Government has not allowed import of used cars for commercial purposes. However, the facility

of importing used vehicles that was meant for expatriate Pakistanis is being misused and

commercial import of used vehicles by used vehicles importers is being undertaken in Pakistan.

An analysis of policy on used car applied by regional countries indicated that countries are using

non-tariff barriers along with tariff barriers to check the import of used vehicles in Pakistan.

Pakistan however has no standards or technical barriers applied to imported used vehicles, which

must be applied across the board.

Analysis of tariff structure for auto industry over time has also suggested that the protection

given to this sector has been decreasing over time and now at a minimum level in comparison to

other regional countries. Lack of auto quality policy provides room for lack of implementation of

26
safety and quality standards for vehicles in Pakistan. This is leading to use of vehicles which are

old and are not fit to use and have become a health and environment hazard.

The Government of Pakistan must realize the importance of Auto Industry in generating

employment for millions of young and skilled Pakistani citizens. The global and local players in

the Auto Industry (both OEMs & APMs) are capable and willing to make significant investments

of Billions of Rupees in introducing new Models and auto parts localization reducing the overall

import bill as well. They only requirement is of long term stable policies and long term

investment plans. At the same time Government must ensure that a consistent environment is

created to reap the benefits offered by this Industry

27
RECOMMENDATIONS:

 The maximum age of Used Cars, Vans, Mini Vans, SUV, 4x4 Vehicles & Light
Commercial Vehicles should be restricted to 3 years. This shall cover all HS Codes under
Chapter 87.03, HS Code 8704.2190 & HS Code 8704.3190

 A uniform system of customs valuation should be adopted for used vehicle regardless of
whether it is below and above 1800cc engine capacity. Fixed duties under SRO 577 to be
replaced by customs valuation on the basis of ITP (Import Trade Price) and MSRP
(Manufacturer Suggested Retail Price). SRO 577 shall be abolished which will lead to
increase in government revenue by rupees 7.6 billion.

 Gift / Baggage schemes should be abolished only Transfer of residence scheme should be
allowed

 Import of Used Vehicles under any scheme should only be allowed from the country in
which the Passport Holder has been residing.

 Import under TR, Gift or Baggage scheme should be restricted to maximum of one
vehicle per passport for a period of at least 2 years. It should be strictly administered to
stop misuse of this facility.

 A compulsory clause may be included in TR, Gift or Baggage scheme that the used
vehicle must be registered in name of expatriate Pakistani importer (or his immediate
family) and should be non-transferable for a period of at least 1 year from the year in
which it is imported (practiced policy in Thailand)

 To ensure road worthiness of imported vehicles on same pattern as adopted by other

regional governments, there shall be mandatory Preshipment inspection of Used Vehicle
(through a recognized Preshipment Agency such as Bureau Veritas OR Japan Auto
Appraisal Institute – JAAI). A template of the inspection criteria and certificate
containing information required from Bureau Veritas / JAAI is elaborated in Annexure E

 To protect consumers, only those vehicles shall be importable into Pakistan, which are
certified by Preshipment Agency as follows:

o Japanese Auction House grading of 4.5 or above

28
 o Odometer Mileage should be below 15,000 km

o Vehicle should not be stolen

o Vehicle body or interior should not be rusted

o Vehicle should have no damage from water flooding

o Vehicle should not have any accident marks on the Chassis

o Vehicle should be usable and road worthy

 Auto industry development plan must be implemented in letter and spirit.

 Usage of smuggled vehicles and non custom paid vehicles should not be allowed to use
anywhere in Pakistan.

 National Auto policy should be implemented to ensure quality, safety & road-worthiness
of used and old cars. Car older than 15 years old should not be allowed to come on road.

29
 Production (P) & Sale (S) of Vehicles Historical Data
From 1995 onwards
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
CAR 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
1300-1600cc (2000cc Diesel)
Honda (Civic) P 4,666 3,922 4,071 3,928 4,744 5,824 4,615 4,610 5,998 12,359 12,274 5,610 5,813 4,985 5,648 6,408 5,396 9,608 10,020
S ~ ~ ~ 3,794 4,871 4,873 4,625 4,637 6,097 12,352 11,998 6,513 5,762 4,662 5,908 6,365 4,977 9,950 9,933
Honda (City) P ~ ~ ~ ~ ~ ~ 3,386 3,786 7,417 11,771 17,606 10,461 8,220 6,755 7,852 9,294 7,089 11,638 13,585
S ~ ~ ~ ~ ~ ~ 3,382 3,749 7,271 11,714 16,136 11,848 8,439 6,482 8,212 9,121 7,142 11,285 13,741
Suzuki (Baleno) P ~ ~ ~ 2,412 2,904 1,251 1,240 2,608 4,153 5,965 2,939 0 0 0 0 0 0 0 0
S ~ ~ ~ 2,045 2,883 1,484 1,188 2,588 4,062 5,879 3,173 0 0 0 0 0 0 0 0
Suzuki (Liana) P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5,370 5,964 2,605 684 900 614 334 150 144
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4,571 6,067 2,983 851 1,025 470 450 164 161
Suzuki (Swift) P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 2,578 4,376 7,128 5,945 5,047
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 2,353 4,080 7,040 6,096 5,128
Toyota (Corolla) P 4,731 5,164 5,651 8,369 8,705 8,486 5,763 12,861 20,525 23,007 31,094 35,036 33,672 27,054 43,382 41,419 46,352 32,882 28,124
S ~ ~ ~ 8,268 8,778 8,116 6,151 12,867 20,321 23,002 30,527 35,762 33,640 26,760 43,510 41,111 46,207 32,608 29,087
Nissan (Sunny) P ~ 599 933 481 83 319 81 51 26 0 0 0 0 0 0 0 0 0 0
S ~ ~ ~ 546 95 310 113 69 25 1 0 0 0 0 0 0 0 0 0
Kia (Classic NGV) P ~ ~ ~ ~ ~ ~ ~ 459 188 465 0 0 0 0 0 0 0 0 0
S ~ ~ ~ ~ ~ ~ ~ 687 81 546 0 0 0 0 0 0 0 0 0
Kia (Spectra) P ~ ~ ~ ~ 890 1,784 2,091 384 73 1 0 0 0 0 0 0 0 0 0
S ~ ~ ~ ~ 825 1,375 2,287 434 127 7 0 0 0 0 0 0 0 0 0
1000cc
Suzuki (Khyber/ Cultus) P 5,720 6,280 5,019 6,991 4,635 6,290 5,441 8,097 10,810 15,591 21,342 29,880 27,662 9,181 12,453 12,414 13,600 12,785 14,467
S ~ ~ ~ 6,768 4,824 6,027 5,637 7,927 10,795 15,611 21,390 29,837 27,563 9,198 12,658 11,428 13,693 13,308 14,682
Suzuki (Wagon-R) P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 2,208
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 1,621
Suzuki (Alto) P ~ ~ ~ ~ ~ 4,489 2,816 4,775 7,196 11,411 17,513 21,546 18,805 6,641 10,665 12,873 15,288 0 0
S ~ ~ ~ ~ ~ 4,187 3,072 4,701 7,148 11,431 16,823 21,988 19,097 6,550 10,794 11,932 16,288 0 0
Hyundai (Santro Plus) P ~ ~ ~ ~ 599 3,937 1,667 3,114 7,902 6,101 8,604 2,225 2,028 327 212 0 0 0 210
S ~ ~ ~ ~ 378 3,454 2,245 3,135 6,922 7,009 7,031 3,470 2,227 404 244 0 0 0 152
800cc
Daihatsu (Cuore) P ~ ~ ~ ~ 1,353 3,304 2,845 4,580 6,468 8,525 7,883 12,786 12,406 5,803 5,145 6,280 3,635 0 0
S ~ ~ ~ ~ 1,382 3,052 3,174 4,579 6,339 8,592 7,883 12,776 12,204 5,852 5,301 6,007 3,857 71 0
Suzuki (Mehran) P 8,986 13,482 14,936 16,501 8,548 3,889 10,143 16,748 27,705 31,207 35,433 36,988 36,249 13,239 22,271 25,935 33,839 34,278 28,485
S ~ ~ ~ 15,841 7,838 5,169 9,964 16,582 27,432 31,165 35,982 37,007 35,526 13,421 22,513 24,119 35,131 32,407 29,509
Suzuki (Bolan) P 3,288 4,411 4,992 4,245 2,871 1,983 2,591 4,359 5,201 7,319 10,429 15,520 17,250 9,639 10,541 14,359 21,594 13,046 13,991
S ~ ~ ~ 4,075 3,037 2,263 2,540 4,360 5,228 7,241 10,451 15,566 17,209 8,664 11,439 13,311 22,540 12,941 14,088
Suzuki (Margalla) P 6,028 3,174 3,074 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
TOTAL CARS: P 33,419 37,032 38,676 42,927 35,332 41,556 42,679 66,432 103,662 133,722 170,487 176,016 164,710 84,308 121,647 133,972 154,255 120,332 116,281
S ~ ~ ~ 41,337 34,911 40,310 44,378 66,315 101,848 134,550 165,965 180,834 164,650 82,844 123,957 127,944 157,325 118,830 118,102

Page 1 of 4
 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
TRUCK
Hino P 1,533 1,164 240 261 489 294 618 792 1,020 1,196 1,499 2,244 2,655 1,700 2,070 1,307 1,237 768 1,058
S ~ ~ ~ 278 455 309 626 758 948 1,262 1,449 2,035 2,652 1,724 2,037 1,338 1,163 842 1,055
Nissan P 383 795 483 251 174 198 206 627 898 1,306 1,652 829 926 567 515 469 228 208 378
S ~ ~ ~ 259 193 198 204 614 845 1,326 1,478 871 1,166 551 519 487 224 226 378
Dong Feng P 789 696 784 486 250 420 310 510 104 23 4 3 0 3 0 0 0 0 0
S ~ ~ ~ 430 318 351 378 511 75 27 16 2 0 4 0 0 0 0 0
Master P ~ ~ ~ ~ ~ ~ ~ ~ ~ 551 466 380 590 384 490 746 712 648 641
S ~ ~ ~ ~ ~ ~ ~ ~ ~ 565 464 378 619 362 505 736 693 583 650
Isuzu P 165 79 59 N.A. N.A. N.A. N.A. N.A. N.A. 128 897 954 822 481 350 379 420 299 597
S ~ ~ ~ ~ ~ ~ ~ ~ ~ 165 866 938 913 495 559 381 314 297 580
Volvo P ~ 4 112 85 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
S ~ ~ ~ 4 56 67 0 0 0 0 0 69 0 0 0 0 0 0 0
Transmobile (Yasoob) P 124 179 5 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
TOTAL TRUCKS: P 2,994 2,917 1,683 1,083 913 912 1,134 1,929 2,022 3,204 4,518 4,410 4,993 3,135 3,425 2,901 2,597 1,923 2,674
S ~ ~ ~ 971 1,022 925 1,208 1,883 1,868 3,345 4,273 4,293 5,350 3,136 3,620 2,942 2,394 1,948 2,663

BUS
Hino P 186 206 186 258 534 444 630 756 1,195 1,392 668 744 887 515 484 394 468 420 477
S ~ ~ ~ 223 501 455 560 795 1,187 1,293 649 770 926 523 517 409 490 410 496
Nissan P 50 79 108 266 146 102 36 60 96 120 48 31 54 0 30 0 6 0 6
S ~ ~ ~ 252 162 102 36 36 107 93 79 47 43 18 30 0 6 0 6
Dong Feng P 154 70 220 600 780 780 420 480 89 110 40 8 15 11 0 0 0 0 0
S ~ ~ ~ 585 699 827 469 501 69 131 47 16 18 9 2 0 0 0 0
Master P ~ ~ ~ ~ ~ ~ ~ ~ ~ 21 6 5 8 0 19 1 22 4 14
S ~ ~ ~ ~ ~ ~ ~ ~ ~ 23 10 6 7 1 19 0 23 4 5
Isuzu P 84 101 77 N.A. N.A. N.A. N.A. N.A. N.A. 119 63 205 182 136 95 95 72 98 61
S ~ ~ ~ ~ ~ ~ ~ ~ ~ 65 142 139 201 135 89 106 90 96 70
TOTAL BUSES: P 474 456 591 1,124 1,460 1,326 1,086 1,296 1,380 1,762 825 993 1,146 662 628 490 568 522 558
S ~ ~ ~ 1,060 1,362 1,384 1,065 1,332 1,363 1,605 927 978 1,195 686 657 515 609 510 577

Page 2 of 4
Jeep & LCV, 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
(4X4)
Suzuki Jeep (Potohar) P 2,274 792 657 622 380 459 564 374 807 1,120 1,290 1,891 0 0 0 0 0 0 0
S ~ ~ ~ 615 464 432 506 465 807 1,107 1,298 1,863 35 0 0 0 0 0 0
Toyota Fortuner P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 847 420
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 812 390
Sigma (Defender) P ~ ~ ~ ~ ~ ~ ~ ~ ~ 444 1,182 1,407 1,590 932 1,172 883 451 628 797
S ~ ~ ~ ~ ~ ~ ~ ~ ~ 407 1,222 1,534 1,413 1,066 1,201 807 342 626 761
Total Jeeps P 2,274 792 657 622 380 459 564 374 807 1,564 2,472 3,298 1,590 932 1,172 883 451 1,475 1,217
S ~ ~ ~ 615 464 432 506 465 807 1514 2520 3397 1448 1066 1201 807 342 1438 1,151
PICK-UP / LCV
Suzuki (Ravi) P 1,743 2,376 2,620 2,034 1,066 778 1,482 1,701 2,085 3,310 5,418 10,117 11,828 12,643 12,590 15,860 15,953 10,808 12,300
S ~ ~ ~ 1,952 1,121 854 1,472 1,710 2,087 3,286 5,416 10,098 11,857 11,900 13,211 14,601 17,015 10,734 12,419
Toyota (Hilux) P 939 2,177 2,223 1,800 1,185 1,411 1,697 3,045 2,229 3,394 2,575 0 2,138 1,441 2,030 3,060 4,930 3,676 4,468
S ~ ~ ~ 1,799 1,223 1,360 1,741 2,861 2,399 3,389 2,551 52 2,001 1,534 2,012 2,897 4,413 4,282 4,520
Dong Feng P ~ ~ ~ ~ ~ ~ ~ ~ 304 21 24 4 94 44 0 0 0 0 0
S ~ ~ ~ ~ ~ ~ ~ ~ 209 86 33 14 100 41 18 0 0 0 0
Hyundai (Shehzore) P ~ ~ ~ ~ 1,534 2,793 2,721 3,069 4,270 8,022 9,368 8,381 6,832 1,996 1,006 186 0 0 698
S ~ ~ ~ ~ 1,429 2,827 2,774 2,987 4,203 8,012 9,234 8,574 6,848 1,883 1,127 203 0 0 680
Master P ~ ~ ~ ~ ~ ~ ~ ~ ~ 1,547 1,767 1,170 462 36 142 36 46 33 11
S ~ ~ ~ ~ ~ ~ ~ ~ ~ 1,528 1,717 1,243 515 42 128 45 44 26 16
TOTAL PICK-UPs: P 2,682 4,553 4,843 3,834 3,785 4,982 5,900 7,815 8,888 16,294 19,152 19,672 21,354 16,160 15,768 19,142 20,929 14,517 17,477
S ~ ~ ~ 3,751 3,773 5,041 5,987 7,558 8,898 16,301 18,951 19,981 21,321 15,400 16,496 17,746 21,472 15,042 17,635

SUV (Sports Utility Vehicle)

(2000cc 4WD)
Kia (Sportage) P ~ ~ ~ ~ ~ ~ 513 820 802 414 0 0 0 0 0 0 0 0 0
S ~ ~ ~ ~ ~ ~ 503 814 698 425 0 0 0 0 0 0 0 0 0
TOTAL SUV: P ~ ~ ~ ~ ~ ~ 513 820 802 414 0 0 0 0 0 0 0 0 0
S ~ ~ ~ ~ ~ ~ 503 814 698 425 0 0 0 0 0 0 0 0 0

FARM TRACTOR
Fiat (New Holland) P 6,503 4,939 6,288 12,198 18,373 16,265 9,138 12,114 16,637 20,840 24,574 27,018 25,740 30,183 31,430 28,582 16,117 18,856 11,920
S ~ ~ ~ 12,272 7,038 15,876 9,371 12,617 16,888 21,163 24,649 26,927 25,907 30,117 31,432 27,187 17,740 18,547 11,608
Millat (Massey P 9,590 5,478 7,856 14,446 6,186 15,370 14,663 14,126 19,133 22,360 24,313 27,080 27,516 29,785 40,177 42,188 32,003 32,003 21,600
Ferguson) S ~ ~ ~ 15,142 16,163 15,245 14,630 14,215 19,012 22,415 24,153 27,125 27,296 30,234 40,080 42,016 32,005 32,046 21,040
Orient IMT Tractor P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1,001
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 936
TOTAL FARM P 16,093 10,417 14,144 26,644 24,559 31,635 23,801 26,240 35,770 43,200 48,887 54,098 53,256 59,968 71,607 70,770 48,120 50,859 34,521
TRACTORS: S ~ ~ ~ 27,414 23,201 31,121 24,001 26,832 35,900 43,578 48,802 54,052 53,203 60,351 71,512 69,203 49,745 50,593 33,584

Page 3 of 4
 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
MOTORCYCLE
Honda P ~ 68,637 63,463 59,639 59,357 78,397 90,111 115,924 190,679 287,271 360,561 331,621 452,791 349,525 483,028 570,777 588,106 636,420 639,066
S ~ ~ ~ 61,536 58,579 78,062 90,027 117,201 190,424 287,172 360,110 332,068 453,380 349,892 483,151 570,168 587,866 635,269 639,499
DYL Motorcycles P ~ 38,160 25,040 23,435 23,448 22,999 22,444 27,427 50,407 71,560 74,423 56,282 64,254 66,190 120,788 114,845 85,913 56,223 11,842
S ~ ~ ~ 23,276 23,719 23,222 22,024 27,886 50,435 71,498 74,293 56,243 63,245 66,484 120,953 113,903 86,000 57,364 12,138
Suzuki P ~ ~ 4,475 4,430 4,154 7,454 8,072 13,610 27,863 26,234 16,954 27,309 33,780 14,592 18,550 20,259 21,389 20,178 24,501
S ~ ~ ~ 4,738 4,360 7,365 8,062 13,788 27,435 26,002 17,183 27,424 33,401 15,326 17,437 19,685 22,694 19,512 24,356
Sohrab P ~ ~ ~ ~ ~ ~ ~ 6,801 12,396 12,065 14,804 7,514 6,073 6,966 7,044 3,607 3,221 2,608 5,305
S ~ ~ ~ ~ ~ ~ ~ 2,403 12,494 12,127 13,943 7,835 6,349 7,059 6,758 3,920 3,101 2,812 4,817
Sohrab (Triwheeler) P ~ ~ ~ ~ ~ ~ ~ 1,343 3,031 3,258 2,166 2,817 1,972 1,732 3,813 1,560 1,063 2,781 900
S ~ ~ ~ ~ ~ ~ ~ 585 3,013 3,186 2,218 2,839 1,992 1,741 3,780 1,581 1,175 2,733 900
Qingqi(2 & 3 wheeler) P ~ ~ ~ ~ ~ ~ ~ 10,064 19,007 15,801 17,198 15,926 26,831 10,616 15,580 21,405 26,058 28,407 26,727
S ~ ~ ~ ~ ~ ~ ~ 10,010 17,855 17,081 15,757 15,035 28,098 10,593 15,393 20,363 26,136 28,156 26,322
Hero P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 34,018 25,798 22,519 21,038 35,010 41,972 38,834 20,466 11,525
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 33,136 25,909 24,237 19,818 36,166 42,270 38,928 20,350 11,511
Ravi P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 23,032 18,243 22,951 26,882 22,308 17,935 21,848
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 22,836 18,457 23,304 26,920 22,121 19,211 22,425
Sazgar (Triwheeler) P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 9,779 4,690 10,863 15,699 16,328 10,244 13,414
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 9,779 4,525 10,618 15,442 16,473 10,347 13,107
Habib P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19,562 15,462 19,234 21,659 25,356 24,294 16,379
S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19,256 14,029 20,208 21,203 25,399 24,463 16,971
TOTAL MOTOR- P ~ 106,797 92,978 87,504 86,959 108,850 120,627 175,169 303,383 416,189 520,124 467,267 660,593 509,054 736,861 838,665 828,576 819,556 771,507
CYCLES: S ~ ~ ~ 89,550 86,658 108,649 120,113 171,873 301,656 417,066 516,640 467,353 662,573 507,924 737,768 835,455 829,893 820,217 772,046
Note: The figures do not include the production / sale of companies who are not members of the Association.

Page 4 of 4
Annex: B

Pakistan's imports from world in chapter 87

Product Pakistan's imports from world
Product label Value in Value in Value in Value in Value in Value in Value in
code
2007 2008 2009 2010 2011 2012 2013

Automobiles w
reciprocatg
piston engine
displacg not
more than
'870321 1000 cc 214515 216029 113737 188793 262970 290441 206743

Automobiles w
reciprocatg
piston engine
displacg > 1000
'870322 cc to 1500 cc 276010 133293 203498 285784 361866 400407 196831

Automobiles w
reciprocatg
piston engine
displacg > 1500
'870323 cc to 3000 cc 91096 113166 63594 116592 117635 151282 164779

Parts and
accessories of
bodies nes for
'870829 motor vehicles 33213 24914 28773 36960 84723 74695 88909

Automobiles
with diesel
engine
displacing
more than
'870333 2500 cc 10663 2075 2464 889 1552 13873 78409

Motorcycles
with
reciprocatg
piston engine
displacg > 50 cc
'871120 to 250 cc 64450 41955 46446 73351 84819 81309 78042
 Diesel powered
trucks with a
GVW not
exceeding five
'870421 tonnes 92043 71770 34581 56933 66204 79106 53446

Motor vehicle
'870899 parts nes 143632 102891 58081 65171 52552 60022 50582

Parts and
accessories of
motorcycles,
incl. mopeds,
'871410 n.e.s. 0 0 0 0 0 39153 47531

Diesel powered
buses with a
seating
capacity of >
'870210 nine persons 37408 34227 25738 29292 28481 51621 38711

Automobiles
with
reciprocating
piston engine
displacing >
'870324 3000 cc 21591 15487 9043 13436 11961 30588 36346

Diesel powerd
trucks w a
GVW exc five
tonnes but not
exc twenty
'870422 tonnes 66074 45202 36010 31095 25020 28803 28258

Special
purpose motor
'870590 vehicles nes 20705 38511 74087 72367 101544 39976 24432

Gas powered
trucks with a
GVW not
exceeding five
'870431 tonnes 12739 24013 9652 19636 26272 35408 22674

Road tractors
for semi-
trailers (truck
'870120 tractors) 14150 19356 13793 33414 6503 14629 19109
 Wheeled
'870190 tractors nes 134528 78141 77257 101289 59717 37983 18422

Buses with a
seating
capacity of
more than nine
'870290 persons nes 4790 3437 7406 3213 20142 39132 10285

Dump trucks
designed for
off-highway
'870410 use 14875 24354 8942 2389 7199 7005 8411

Shock
absorbers for
'870880 motor vehicles 11030 11960 12569 18920 14687 14702 8235
Mobile
concrete
'870540 mixers 2257 6066 3298 1168 1045 2405 6288

Steering
wheels,steering
columns and
steering boxes
for motor
'870894 vehicles 2730 4046 4357 7873 6756 4699 5594

Motorcycles
with other than
a reciprocating
'871190 piston engine 67 179 2 10 0 1 5113

Automobiles
nes including
gas turbine
'870390 powered 20119 18375 7505 6021 9710 8349 3569

Brakes and
servo-brakes
and their parts,
for tractors,
'870830 motor vehicles 0 3026 3029 4090 4083 2472 3250

Diesel powered
trucks with a
GVW
exceeding
'870423 twenty tonnes 19615 22639 9359 17549 17892 24882 3169
 Bicycles and
other cycles
(including
delivery
tricycles),not
'871200 motorised 625 697 803 2144 3164 3595 3149

Drive axles
with
differential for
'870850 motor vehicles 1242 1643 1526 2701 2593 5366 2743
Tansmissions
for motor
'870840 vehicles 286 2748 990 304 965 439 2422
Bicycle parts
'871499 nes 1098 8685 1493 4480 1955 4949 1960

Automobiles
with diesel
engine
displacing
more than
1500 cc to
'870332 2500 cc 41151 28819 10003 5912 5022 4851 1856
Trailers for
housing or
'871610 camping 105 49 10 73 185 593 1777

Wheelbarrows,
hand-carts,
rickshaws and
other hand
propelled
'871680 vehicles 798 1027 704 324 766 1034 1466

Wheels
including parts
and accessories
for motor
'870870 vehicles 5912 4018 2557 2757 3102 2731 1422

Radiators for
'870891 motor vehicles 1253 1571 2660 2005 2885 2181 1416

Wheelchairs
not
mechanically
'871310 propelled 409 372 618 3934 927 1329 1264

Clutches and
parts for motor
'870893 vehicles 1962 2526 1545 1754 2163 1262 1127
 Trailer and
other vehicle
'871690 parts nes 1267 1106 796 1778 1419 680 1050

Motorcycles
with
reciprocatg
piston engine
displacg > 250
'871130 cc to 500 cc 326 141 18 60 188 131 818

Bodies for
tractors, buses,
trucks and
special purpose
'870790 vehicles 42 198 318 453 271 754 818

Automobiles
with diesel
engine
displacing not
more than
'870331 1500 cc 1462 2410 428 1188 32 509 790

Bumpers and
parts for motor
'870810 vehicles 2268 1711 654 832 1085 1010 787
Fire fighting
'870530 vehicles 1647 1422 286 16583 12674 797 768

Motorcycles
with
reciprocatg
piston engine
displacg more
'871150 than 800 cc 141 33 53 96 90 223 671

Safety seat
belts for motor
'870821 vehicles 1990 1611 1008 1185 4437 746 642

'870510 Mobile cranes 3616 3277 7707 2425 776 8048 594

Bicycle hubs
and free-wheel
sprocket
'871493 wheels 325 392 433 465 855 451 407

Tanker trailers
and semi-
'871631 trailers 2122 4533 602 599 361 1318 400
 Work trucks
not electrically
'870919 powered 256 337 310 3343 153 83 390

Baby carriages
and parts
'871500 thereof 523 514 480 502 405 330 374

Motorcycles
with
reciprocatg
piston engine
displacg > 500
'871140 cc to 800 cc 92 133 159 42 91 373 295
Trailers for
agricultural
'871620 purposes 15 17 40 0 0 0 261

'871495 Bicycle saddles 99 102 243 332 219 283 185

Trailers nes for

the transport
'871639 of goods 101 501 1132 196 0 0 146

Mobile drilling
'870520 derricks 0 1450 7743 3586 385 3595 136
Work truck
'870990 parts 58 273 23822 98 141 104 126

Bicycle brakes,
including
coaster braking
hubs, and parts
'871494 thereof 56 55 86 155 78 28 111

Bodies for
passenger
carrying
'870710 vehicles 11 52 31 239 347 68 110

Snowmobiles,
golf cars and
'870310 similar vehicles 13 233 114 113 107 302 105

Wheelchairs,
mechanically
'871390 propelled 76 96 55 175 58 188 103

Bicycle pedals
and crank-gear
and parts
'871496 thereof 173 135 95 129 56 54 88
 Pedestrian
controlled
'870110 tractors 261 3 0 0 33 1 65

Mufflers and
exhaust pipes
for motor
'870892 vehicles 1852 1608 662 243 75 55 64

Bicycle frames
and forks, and
'871491 parts thereof 647 611 214 165 198 13 61
Bicycle wheel
rims and
'871492 spokes 455 798 486 262 181 94 57

Work trucks,
electrically
powered, for
use in factories
and
'870911 warehouses 1282 0 15 32 0 25 41
Trailers and
semi-trailers
'871640 nes 147 674 85 14 76 0 28
Wheelchair
'871420 parts nes 2 31 2 3 10 762 8

Safety airbags
with inflator
system and
parts thereof,
'870895 for tractors, m 0 1 5 0 217 19 4

Motorcycles
with
reciprocating
piston engine
displacing 50 cc
'871110 or less 69 103 43 244 53 44 2
'870490 Trucks nes 266 323 40 0 195 52 2

Chassis fittd w
engines for the
vehicles of
headg Nos
'870600 87.01 to 87.05 0 0 14 4 847 0 0
 Gas powered
trucks with a
GVW
exceeding five
'870432 tonnes 616 0 0 35 0 38 0

Mounted brake
linings for
'870831 motor vehicles 424 0 0 0 0 0 0

Brake system
parts nes for
'870839 motor vehicles 2352 0 0 0 0 0 0
Track-laying
tractors
'870130 (crawlers) 3 0 0 0 0 0 0

Tanks and
other
armoured
fighting
vehicles,
motorised, and
'871000 parts 0 0 0 0 0 67 0

Non-driving
axles and parts
for motor
'870860 vehicles 357 0 0 0 0 0 0
Motorcycle
'871411 saddles 17 11 71 2 1 0 0
Motorcycle
'871419 parts nes 27640 52064 45050 59345 79106 0 0
ANNEX—C

Product Product Name Maximum

Rate (%)
870323 -- Of a cylinder capacity exceeding 1,500 100
cc but n
870324 -- Of a cylinder capacity exceeding 3,000 100
cc
870332 -- Of a cylinder capacity exceeding 1,500 100
cc but n
870333 -- Of a cylinder capacity exceeding 2,500 100
cc
870390 - Other 100
871110 -With reciprocating internal combustion 70
piston eng
871120 -With reciprocating internal combustion 70
piston eng
871130 -With reciprocating internal combustion 70
piston eng
871140 -With reciprocating internal combustion 70
piston eng
871150 -With reciprocating internal combustion 70
piston eng
871190 - Other 70
870322 -- Of a cylinder capacity exceeding 1,000 60
cc but n
870331 -- Of a cylinder capacity not exceeding 60
1,500 cc
870421 -- g.v.w. not exceeding 5 tonnes 60
870431 -- g.v.w. not exceeding 5 tonnes 60
870321 -- Of a cylinder capacity not exceeding 55
1,000 cc
870600 Chassis fitted with engines, for the motor 50
vehicle
870710 - For the vehicles of heading 87.03 50
870790 - Other 50
870810 - Bumpers and parts thereof 35
870821 -- Safety seat belts 35
870829 -- Other 35
870830 (2007-) - Brakes and servo-brakes; parts 35
thereof
870840 - Gear boxes and parts thereof 35
870850 - Drive-axles with differential, whether or 35
not pr
870870 - Road wheels and parts and accessories 35
thereof
870880 - Suspension systems and parts thereof 35
(including
870891 -- Radiators and parts thereof 35
870892 -- Silencers (mufflers) and exhaust pipes; 35
parts t
870893 -- Clutches and parts thereof 35
870894 -- Steering wheels, steering columns and 35
steering
870895 (2007-) -- Safety airbags with inflater 35
system; pa
870899 -- Other 35
870990 - Parts 35
871200 Bicycles and other cycles (including 35
delivery tric
871411 (-2011) -- Saddles 35
871419 (-2011) -- Other 35
871690 - Parts 35
870110 - Pedestrian controlled tractors 30
870120 - Road tractors for semi-trailers 30
870130 -Track-laying tractors 30
870190 - Other 30
870310 -Vehicles specially designed for travelling 30
on sno
870410 - Dumpers designed for off-highway use 30
870422 -- g.v.w. exceeding 5 tonnes but not 30
exceeding 20
870423 -- g.v.w. exceeding 20 tonnes 30
870432 -- g.v.w. exceeding 5 tonnes 30
870490 - Other 30
870510 - Crane lorries 30
870520 -Mobile drilling derricks 30
870530 - Fire fighting vehicles 30
870540 - Concrete-mixer lorries 30
870590 - Other 30
870911 -- Electrical 30
870919 -- Other 30
871491 -- Frames and forks, and parts thereof 25
871492 -- Wheel rims and spokes 25
871493 -- Hubs, other than coaster braking hubs 25
and hub b
871494 -- Brakes, including coaster braking hubs 25
and hub
871495 -- Saddles 25
871496 -- Pedals and crank-gear, and parts thereof 25
871499 -- Other 25
870210 -With compression-ignition internal 20
 combustion pis
870290 - Other 20
871000 Tanks and other armoured fighting vehicles, 20
motori
871500 Baby carriages and parts thereof. 20
871610 -Trailers and semi-trailers of the caravan 15
type, f
871620 - Self-loading or self-unloading trailers 15
and semi
871631 -- Tanker trailers and tanker semi-trailers 15
871639 -- Other 15
871640 - Other trailers and semi-trailers 15
871680 - Other vehicles 15
871310 - Not mechanically propelled 5
871390 - Other 5
871420 - Of carriages for disabled persons 5
(source WITS)
 GOVERNMENT OF PAKISTAN

*********

TRADE POLICY: 2012-15

PART-A IMPORT POLICY ORDER

PART-B EXPORT POLICY ORDER

PART-C
IMPORTS AND EXPORTS
(CONTROL) ACT, 1950

MINISTRY OF COMMERCE
ISLAMABAD
 Appendix-‘C’
[See paragraph 5 (A) (vii)]
LIST OF ITEMS NOT IMPORTABLE IN USED / SECOND HAND CONDITION

S.No. Description PCT

Codes
10. Vehicles of chapter 87 (including likewise 8701.1010 8701.1090 8701.2010 8701.2020
chassis of used automotive vehicles cut 8701.2030 8701.2040 8701.2090 8701.3010
into minimum of two pieces whether or not 8701.3090 8701.9010 8701.9020 8701.2010
described as steel scrap) except the 8701.9040 8701.2030 8701.9060 8701.9090
following: - 8702.1010 8702.1020 8702.1090 8702.9010
i) Dumpers designed for off highway 8702.9020 8702.9090 8703.1000 8703.2111
use in CBU condition having 8703.2112 8703.2113 8703.2114 8703.2115
payload capacity exceeding 5 8703.2119 8703.2191 8703.2192 8703.2193
tones subject to certification by the 8703.2199 8703.2210 8703.2220 8703.2290
competent Authority of exporting 8703.2311 8703.2319 8703.2321 8703.2329
country or a recognized pre-
8703.2410 8703.2490 8703.3111 8703.3112
shipment company listed at
8703.3121 8703.3129 8703.3131 8703.3139
Appendix-H to the effect that said
8703.3211 8703.3219 8703.3221 8703.3222
machinery / transport
equipment(a) is compliant with 8703.3223 8703.3224 8703.3225 8703.3226
EURO-II emission standards, and 8703.3227 8703.3229 8703.3310 8703.3390
(b) is in good working condition/ 8703.9000 8704.1010 8704.1090 8704.2110
has a remaining productive life of 8704.2190 8704.2211 8704.2219 8704.2291
five years. 8704.2299 8704.2310 8704.2390 8704.3110
ii) Bullet proof vehicles (see Sr No. 8704.3190 8704.3210 8704.3290 8704.9010
22 of Part-II of Appendix-B) 8704.9090 8705.1000 8705.2000 8705.3000
iii) Armoured Security Vans H.S 8705.4000 8705.9000 8706.0000 8707.1000
No.(8710.0010 & 8710.0090), 8707.9010 8707.9090 8708.1010 8708.1020
(See S.No.60 of Part-I of 8708.1090 8708.2110 8708.2120 8708.2190
Appendix-B). 8708.2911 8708.2919
iv) Spraying lorries or sprinklers 8708.2120 8708.2190 8708.2911
(8705.9000), not older than five 8708.2919 8708.2920 8708.2931
years shall be allowed subject to
certification by a recognized pre- 8708.2939 8708.2941 8708.2942
shipment company listed at 8708.2949 8708.2990
Appendix-H to the effect that the 8708.3010 8708.3020 8708.3031 8708.3032
said lorries (a) compliant with 8708.3039
Euro-II standards (b) in 8708.4010 8708.4090 8708.5010
accordance with the original 8708.5020
manufacturer specifications and
8708.5090
(c) has a useful productive life.
8708.7010 8708.7020 8708.7090 8708.8010
v) A limited number of vehicles
8708.8020 8708.8090 8708.9110
imported in completely built up
8708.9120 8708.9130 8708.9190
(CBU) condition by the Export
Processing Zones (EPZs) 8708.9210 8708.9220 8708.9290 8708.9310
investors under special permission 8708.9320
granted to the industrial 8708.9390 8708.9410 8708.9420
undertaking in the Export
Processing Zones (EPZs) in terms 8708.9490 8708.9500
of CBR’s U.O No. 1980-81, CUS- 8708.9910 8708.9920 8708.9930
8708.9940 8708.9950
 th
EX/5(17), dated the 11 April, 8708.9990 8709.1100 8709.1900 8709.9000
1982, read with Customs General 8710.0010 8711.1010 8711.1090 8711.2010
th
Order No. 1/83, dated the 9 8710.0090
January, 1983, shall be allowed to 8711.2090 8711.3010 8711.3020 8711.3090
be disposed of in tariff area after 8711.4010 8711.4090 8711.5010 8711.5090
five years of their import and 8711.9010 8711.9090 8712.0000 8713.1000
usage by the importing industrial 8713.9000 8714.1010 8714.1020 8714.9600
undertakings on payment of 8714.9900 8715.0000 8716.1010 8716.1090
leviable duties and taxes in 8716.2010 8716.2090 8716.3110 8716.3190
accordance with law. 8716.3910 8716.3990 8716.4010 8716.4090
vi) Automatic specialized mobile 8716.8010 8716.8090 8716.9000
trolleys in wet processing textile
industry (8705.9000).
vii) Mobile cranes/lorries (8705.1000)
by industrial units subject to
certification by the competent
Authority of exporting country or a
recognized pre-shipment company
listed at Appendix-H to the effect
that said machinery / transport
equipment(a) is compliant with
Euro-II emission standards or not
older than ten years, and (b) is in
good working condition/ has a
remaining productive life of five
years.
viii) Mobile clinics (See Sr. No.27 of
Part-II of Appendix-B).
ix) Motorized wheel chairs
(8713.0000).
x) Prime movers (See Sr. No 28 of
Part-II of Appendix-B)
xi) Waste disposal trucks (8704.2299,
8704.2390) (See Sr. No.24 of
Part-II of Appendix-B)
xii) Fire fighting vehicles (8705.3000)
(See Sr. No.25 of Part-II of
Appendix-B)
xiii) Ambulances (See Sr. No.23 of
Part-II of Appendix-B)
xiv) Buses (87.02) not older than three
years with seating capacity of forty
or above, subject to the condition
that such buses shall be certified
by a pre-shipment inspection
company, as listed in Appendix-H,
to the effect that such buses have
a road worthiness of at least five
years from the date of importation.
The formula for determining the
age of vehicles provided in the
procedure for import of vehicles
(Appendix-E) shall be equally
applicable in determining the age
of buses.
 Annexure E
Preshipment Inspection

Vehicle details verified and certified on Pre-Shipment Inspection Certificate

1. Type
2. Make
3. Model
4. Color
5. Fuel
6. Driving System
7. First registration month & year
8. Auction grade
9. Inspection mileage (Odometer reading)
10. Engine Capacity
11. Engine No
12. Chassis No
13. Marks of Accidents
14. Condition of Chassis

Criteria of allowing import of Used Vehicles in Pakistan

15. Auction Grading should be minimum 4.5 points or above

16. Odometer Mileage should be below 15,000 km
1. Vehicle should not be stolen
2. Vehicle body or interior should not be rusted
3. Vehicle should have no damage from water flooding
4. Vehicle should not have any accident marks on the Chassis
5. Vehicle should be usable and road worthy
Sample of Preshipment Certificate