KARACHI, June: Sale of locally produced cars at the authorised dealers showrooms has slowed down as customers wait for price reduction following the government’s decision in June 3 budget reducing the general sales tax to 16 per cent from 17 and removing 2.5 per cent Federal Excise Duty (FED).
The GST cut and FED waiver will come into force from July 1, 2011 and customers would generally like to avail the benefit of price cut.
Pak Suzuki Motor Company Limited (PSMCL) senior general manager Ashfaq Hussain said that the car sales had declined by 2530 per cent after the budgetary tax relief.
He said price cut definitely holds weight as customers will have to pay Rs30,000-35,000 less on a car costing Rs1 million due to one per cent cut in GST and FED waiver.
He added that most of the cars were sold on cash basis while the share of car financing by banks is 20 per cent in total sales.
An authorised dealer of Toyota Corolla and Daihatsu cars said that sale and booking of new cars had plunged by 30 per cent.
He said the share of cash buying in total sales is 80 per cent, while share of cars booked in advance is just 20 per cent.
A dealer of Honda cars said sales had plunged by 20-25 per cent after the budget. He was of the view that the price cut in a car costing Rs1 million will range between Rs20,000-22,000.
A motorcycle dealer at Akbar Road said that prices of Chinese bike will drop by at least Rs1,000, while the price of costlier Japanese assembled bikes will plunge by Rs2,000-3,500.
Anticipating a drop in prices buyers would like to purchase two wheelers after July 1, 2011. The dealer said that market had witnessed a drop of at least 40-50 per cent in sales after budget as buyers were not turning up.
Car and bike makers had good sales up till now thanks to rising farm income.
Cut in prices on account of GST and FED may not be a serious issue for the rich growers but the price cut in cars will definitely prove a breather for the salaried class.
Overall car sales in JulyMay 2010-11 rose by 11 per cent to 121,455 units as compared to 109,637 units in the same period of last fiscal.
However, car dealers said that after the killing of Osama Bin Ladin earlier in May followed by deteriorating law and order situation car sales of many models had dropped in May as compared to April 2011.
According to figures of Pakistan Automotive Manufacturers Association (Pama), overall car sales in May fell to 11,479 units as compared to 12,172 in April 2011.
Sale of Honda Civic, Honda City and Toyota Corolla remained low at 362, 582 and 3,331 units, respectively, as compared to 612, 1,028 and 4,122 units in April 2011.
Suzuki Cultus, Suzuki Alto, Daihatsu Cuore, Suzuki Mehran and Suzuki Bolan sales in May 2011 stood at 1,321, 1,056, 569, 2,343 and 1,302 units, respectively, as compared to 1,264, 1,101, 312, 1,875 and 1,301 units in April 2011.
In July-May 2010-11, sales of Honda Civic, Honda City and Toyota Corolla rose to 6,125, 8,573 and 38,273 units, respectively, as compared to 5,206, 7,186 and 38,757 units in the same period of last fiscal.
Sale of Cultus, Alto, Cuore, Mehran and Bolan in JulyMay 2010-11 were 10,939, 11,552, 5,544, 23,302 and 12,867 units, respectively, as compared to 11,142, 9,649, 4,673, 19,831 and 10,010 units in the corresponding period of last fiscal year.
Tax relief Car sales down as buyers wait for price cut