Islamabad148 used cars entered Pakistan in April.
Tariff barriers cut monthly imports 96% from last year by closing loopholes in overseas-Pakistani gift and baggage schemes used for commercial imports.
Parts maker association Paapam says the Rs 60 billion annual revenue loss from used imports is now reversing as local output rises.
Sources: Dawn
THE INFANT INDUSTRY ARGUMENT
First articulated by Alexander Hamilton in 1791 and systematized by Friedrich List in 1841, the doctrine holds that domestic manufacturers cannot survive against established foreign producers without temporary tariff shelter. Every major industrializer — Britain, the US, Germany, Japan, South Korea — used it on the way up, then preached free trade once dominant.
THE BAGGAGE LOOPHOLE
Pakistan formally banned commercial used-car imports decades ago, but three schemes — Personal Baggage, Transfer of Residence, and Gift — let overseas Pakistanis bring vehicles in at concessional duty. Dealers organized fronts of expatriates to import showroom inventory under personal allowances. Closing the loopholes, not raising the headline tariff, is what cut volumes 96%.
THE THREE-COMPANY CARTEL
Pakistan's passenger-car market has been dominated since the 1990s by joint ventures with Toyota, Honda, and Suzuki. Tariff walls of 100%+ on CBU imports created the protected market; the companies responded by selling older platforms at higher prices than the same cars cost in unprotected markets — the predictable failure mode of infant-industry protection without sunset clauses.
DEEPENING VS ASSEMBLY
Industrial policy distinguishes two stages: screwdriver assembly (importing CKD kits and bolting them together) versus deepening (forcing local content in engines, transmissions, electronics). Pakistan has stayed largely at the first stage for thirty years. The PAAPAM parts-maker lobby exists precisely because deepening creates the parts industry; without it, assembly plants are just import-substituting middlemen.
THE FX CONSTRAINT
Auto imports — finished cars and CKD kits alike — are dollar-denominated. Every used Toyota that lands costs the State Bank reserves it doesn't have. Import compression on cars is rarely about industrial policy alone; it is a balance-of-payments tool reaching for the most discretionary import category first.
THE KOREAN MODEL
South Korea banned Japanese car imports outright from 1962 to 1999 while subsidizing Hyundai and Kia to export-or-die. The protection was conditional on hitting export targets — fail to export, lose the subsidy. Pakistan's auto protection has never carried that conditionality, which is why its assemblers sell only domestically while Hyundai sells globally.