Automakers Fear IMF Backing Used Car Imports for Pakistan is a Big Mistake

The upcoming National Tariff Policy 2025–30 has raised serious concerns among local auto manufacturers. The IMF-backed policy proposes an increase in used car imports, including the commercial import of used vehicles. The industry has warned that these steps will lead to an influx of cheaper used vehicles, undermine localization efforts, weaken employment in manufacturing, and increase pressure on forex reserves and the current account. The plan also includes a five-year reduction in import duties on completely built-up (CBU) vehicles, along with the removal of Additional Customs Duty (ACD), Regulatory Duty (RD), and the fifth schedule. Tariff slabs will be reduced from five to four, and the maximum slab rate will be capped at 15 percent. They said abrupt tariff shifts jeopardize an industry that sustains 2.5 million jobs, contributes 4 percent of national tax revenue, and has seen over $5 billion in investment. Former chairman of Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Aamir Allawala criticised the growing share of used car imports and warned that these often involve unregulated transactions through hawala and cash. He noted that fixed duties on small used cars remain low, while the government plans to raise sales tax on small locally assembled vehicles to 18 percent. He called for volume support and long-term policy continuity to protect the domestic vendor base. Steel producers also warned that tariff reductions without regionally competitive input costs could lead to large-scale dumping of steel. He called for increased development allocations and a roadmap that incentivizes steel production through domestic iron ore.