ISLAMABAD: The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has urged the government to retain safeguards against the commercial misuse of used-car import schemes as the government finalises the Auto Policy 2026-31.
In a letter addressed to the prime minister, finance minister, minister for industries and production and other relevant authorities, PAAPAM Chairman Usman Aslam Malik opposed removing the proposed one-year mandatory non-transfer condition for vehicles imported under overseas facilitation schemes.
The association warned that scrapping the restriction could undermine domestic auto-parts manufacturing and reverse progress in documenting the economy. It said around 1.8 million jobs linked to local auto-parts manufacturing could be affected if used-car imports remain inadequately regulated.
According to PAAPAM, every used vehicle imported into the country displaces nearly Rs1.5 million worth of locally manufactured components, putting pressure on domestic production capacity.
The association said annual used-car imports reached an estimated 50,000 units last year, accounting for nearly 30% of the domestic automotive market. It further estimated that informal activity linked to these imports has created a black-money ecosystem worth around Rs200 billion, potentially diverting overseas remittances from formal banking channels into hundi and hawala networks.
PAAPAM also raised concerns over changes in tariff policy that it said were making imported used vehicles increasingly attractive to commercial traders.
Under the National Tariff Policy 2025-30, the duty premium on used-car imports is scheduled to decline from 40% over new vehicles in the current fiscal year to zero by FY30. The association also cited the reduction in customs duty to 30% on new completely-built-up vehicles of 850cc or below announced in the 2026-27 budget, along with depreciation allowances of up to 36%.
Malik said removing the one-year non-transfer condition would place additional pressure on parts manufacturers, which currently supply up to 65% of components by value to domestic vehicle assemblers.
PAAPAM has asked the prime minister and his economic team to retain the one-year non-transfer requirement in the final Auto Policy 2026-31, arguing that overseas vehicle facilitation schemes should benefit their intended beneficiaries rather than commercial dealer networks operating outside the formal economy.
