KARACHI - The original equipment manufacturers suppliers of the local automobile industry has demanded that the ban on import of used vehicles that are more than 3 years old be continued by the government in the upcoming financial year in order to protect OEMs from suffering huge losses on their investment in plants and infrastructures. It is also proposed that government should maintain 1 per cent depreciation allowance on used imported vehicles by overseas Pakistanis with an intention of providing a much needed relief to the industry by curtailing the influx of such old four wheelers into the country. The representatives of OEMs and PAMA (Pakistan Automotive Manufacturers Association) told this scribe that a free hand in allowing the import of used cars will cause an immense damage to the local industry and will result in the drain of valuable foreign exchange and dumping of junk cars in the country as such cars are at the end of their productive life, or are not compatible with Pakistani conditions. They further said this will also result in layoffs on a massive scale, not only for the in-house work force at the automotive plants, but also for the large number of vendors, to whom certain automotive parts are outsourced for manufacturing. As a result of reducing depreciation rate from 2 per cent to 1 per cent, the used car imports slowed to 6,524 units for the year (2008-09) compared 13,145 units for 2007-08. An official of PAMA said that the industry demand for the locally manufactured Passenger Cars (PC) and Light Commercial Vehicles (LCV) grew by 78 per cent to 37,222 units in the third quarter ended March 2010, as compared to 20,856 units sold for the same period last year. According to PAMA, on nine months year to date basis, the overall sales increased by 34 per cent to 98,738 units versus 73,910 units sold in the corresponding period to March 2009. There are reports that used car importers usually resort to malpractices using false documentation to import a large number of used cars into the country, the official said and added that the current policies on used cars in Pakistan are still extremely liberal when compared to India, Thailand and other countries and are often misused by importers under transfer of baggage scheme. The official on behalf of PAMA suggested that government should prepare long term consistent policies to encourage other manufacturers to invest in the country and duties on cars with higher engine capacities (above 1800 cc) should be rationalised so that consumers have a choice to import these vehicles. As per PAMAs document findings, Pakistan has got the lowest tariff rate on used vehicle compared to India and Thailand. Even today used vehicles up-to 3 years old are allowed into the country with a depreciation allowance of 25 per cent. There is no product support for such vehicles and ultimately the customer suffers. Government should have policies which assist local industry as it creates jobs, Technology transfer, increase investment, etc. It is important to mention here that used parts are banned in the country and are cleared by paying some penalties. There is no value which can be ascertained for such imports. New parts, under the guise on old parts are imported. Used parts ban should be strictly implemented, as the government suffers heavy losses in revenue due to under invoicing and counterfeit of these parts. According to PAMA document the market size would be around 300,000 units in the coming 2 years despite the AIDP vision of around 500,000 units to be produced by the auto assemblers by the year 2012. These assumptions are based on current volumes of 2008/09.