Customs clears over 4,400 used cars in July

KARACHI: Pakistan Customs has cleared over 4,400 used/old vehicles in July under personal baggage and related schemes, sparking serious concerns about potential money laundering and devastating impacts on the country’s domestic automotive sector.

The unprecedented import volume included more than 600 high-value vehicles worth nearly Rs 50 billion, with industry experts warning of systematic abuse of import schemes originally intended to help overseas Pakistanis.

According to the import data, 3,996 vehicles cleared under the Personal Baggage scheme, 331 vehicles were released through the Gift scheme, and 96 vehicles were cleared under the Transfer of Residence scheme.

Used vehicles banned for commercial import: Customs Appraisement

The data showed that the importers of most of the high-value luxury vehicles were from underprivileged areas of Khyber Pakhtunkhwa, importing luxury vehicles worth billions.

The import data further revealed that the value of these highly expensive vehicles was from 10,000 to 250,000 Japanese Yen, equivalent to Rs 19,000 to Rs 4.7 million, suggesting massive under-invoicing of nearly 99 percent. In one of the many cases, the importer has declared the value of a 2020 Toyota Land Cruiser at just Rs 19,000.

“There’s no way a Toyota Land Cruiser model 2020 is worth just Rs 19,000,” said industry sources, who noted that importers likely transfer the actual vehicle cost through illegal channels abroad.

They said that many importers, who claimed vehicles under personal schemes, reside in the United Arab Emirates and have no travel history to Japan, where the vehicles were purchased. Online auction records in many cases confirmed the vehicles were sold in Japan, but not registered to these importers. The export certificates and shipping documents of these imports were commercial in nature rather than legitimate personal baggage, gifts, or residence transfers, sources said.

The automotive sector, which directly employs over 330,000 people and supports 1.5 million jobs across allied industries, faces what experts describe as an existential threat. July’s imports alone are estimated to have cost local vendors Rs 6.5 billion in lost revenue, calculated on the basis that each domestically manufactured car contains Rs 1.5 million worth of locally produced components.

“The incessant import of used cars is contributing to long-term economic harm in terms of draining foreign exchange, displacing local jobs, and undermining tax revenue from domestic manufacturing,” said Shehryar Qadir, Senior Vice Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM).

Qadir said that as total market demand is finite, every used vehicle imported represents a direct loss of sales for domestic assemblers and parts vendors, stripping away demand for locally produced tires, seats, wiring harnesses, lamps, and hundreds of other components that sustain 300,000 direct jobs in the vendor ecosystem.

Pakistan has averaged 34,000 used vehicle imports annually over the past decade, making used imports the second-largest car source in the market, often exceeding volumes from major Original Equipment Manufacturers. The 2024-25 period saw nearly 40,000 used cars imported, capturing almost a quarter of total market share and costing local parts manufacturers an estimated Rs 60 billion in lost revenues.

This positions Pakistan as an anomaly among automotive-producing nations. Countries like India, Thailand, and Vietnam have virtually eliminated used car imports to protect their domestic industries. “No serious automotive manufacturing nation tolerates large-scale used car imports,” Qadir said. “From Thailand to Vietnam and India, every successful auto economy has treated second-hand vehicle inflows as an existential threat to domestic industrialization.”

Despite mounting criticism, Pakistan Customs maintains its position that no illegal activity has occurred. Officials argued they are processing clearances according to existing rules, noting that the schemes for overseas Pakistanis contain no volume restrictions.

“This is not a marginal leak but a structural distortion: a parallel car market, operating through loopholes intended for overseas Pakistanis that competes directly with locally assembled vehicles,” Qadir said.

Copyright Business Recorder, 2025

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}