Transport Group imports continue to fuel trade deficit

Pakistan’s decades of quaint auto policies, coupled with an unchecked oligarchy of Japanese producers (Suzuki, Toyota, and Honda) have resulted in a trend of rising imports of vehicles from foreign countries. Ironically, however, these vehicles are imported from Japan too produced by the same brand names.

The rising imports are proof of the latent fact that Pakistan’s consumers continue to demand for more varieties when choosing from local manufacturers. Pakistani consumers have been paying unfair prices for ill equipped and unsafe vehicles for decades.

The oligarchy’s strong grip was broken after Government announced the new Automotive Development Policy (ADP) 2016 -2021. ADP, approved by Economic Co-ordination Committee two years ago has opened the doors for foreign car manufacturers to gain a foothold in local market. Renault, Nissan – Datsun, Kia, Hyundai and Audi have all entered in Pakistan to setup auto assembly plants in partnership with local manufacturers. The government hopes that these new brands will help government put a cap on rising imports in Transport Group.

Transport Group Imports – Fiscal year 2018

Imports from Transport Group recorded highest ever growth during the cumulative period between July – February 2018 as it reached $ 2.905 billion against $ 1.981 billion during the same period last year. The Group continues to be the fastest growing subset under commodities in the country.

According to data released by Pakistan Bureau of Statistics, Transport Group is one of the leading causes for rising trade deficit in the country as more and more consumers opt for imported vehicles amidst lack of options from local producers.

Transport Group includes all Road Motor Vehicles, Completely Built Unites (CBU) including Buses, Trucks, Cars and Bikes, Completely Knocked down Units, Parts & Accessories, Aircrafts, Ships, Boats and Other Transport Equipment.

Road Motor Vehicles (Build Units) were amongst the leading cause for imports in first eight months of current fiscal year after a total of more than $ 1.899 billion worth of vehicles were imported up by 19.73 percent from $ 1.586 billion last year. In addition to that, CBU imports were up by 3.41 percent, CKD imports registered a phenomenal 140.48 percent growth clocking in at $ 853.054 million; highest in last fifteen months and second highest ever during last fifteen years.

Furthermore, Aircrafts, Ships and Boats imports also went up by 161.48 percent clocking in at $ 728.492 million, Parts & Accessories imports were also up by 26.44 percent during the period to reach $ 277.888 million from $ 116.520 million last year.

Other Transport Equipment imports have also skyrocketed in the last eight months reaching $ 277.888 million up by 138.49 percent.