Letter published in daily The News, dated 7/8/06
Regulator needed
With reference to a news item captioned “Reconditioned cars fail to woo buyers” there were some wrong facts and figures about the automobile industry.
It was mentioned that “people are losing their interest in imported used cars” but the fact is that according to figures compiled by the Pakistan Automotive Manufacturers Association (PAMA) itself, and reported in several newspapers, a total of 155,514 cars were sold in 2005-06 as compared to 127,309 units in 2004-05. It is a result of demand, triggered by the failure of local manufacturers to satisfy customers. The import of used cars stood at 45,479 units in July-June 2005-06 as compared to 11,877 units in 2004-05.
Noticeably, the demand for imported used cars remained high during the last fiscal year. It means that there is a big vacuum in supply estimated at 30,000-40,000 units. As far as supply is concerned as mentioned in the report, Pakistan is an open economy and local traders in the market know very well the demand of old cars.
Experts say that interest rates, although higher than before, are still low enough to encourage car financing. Introduction of new models and overall economic growth have also boosted the auto demand during 2005-06. Increased economic activity, resulting in cargo movement of both import and export items in the country, has pushed up the sales of trucks to 4,273 units in 2005-06 from 3,345 units. Similarly, sales of light commercial vehicles increased from 25,056 to 31,922 units.
Local car manufacturers have made people suffer despite the increase in supply of both local and imported cars. Many car-buyers have complaints in this regard. In such a situation, formation of a regulatory body is needed. This will help restore the confidence of customers by ensuring proper after-sales service. As for the campaign by local manufacturers against imported cars, it is interesting to note that the former have had many complaints against their brand new zero meter models. My own Toyota Corolla is a good example of this.
Competition should benefit the consumer but in Pakistan this has only happened in the telecom sector. That is why the automobile industry badly needs a regulator.
Saleem Mahmood
Karachi