By Arshad Hussain
Saturday, May 28, 2005
KARACHI: The value of vehicles imported by commercial car dealers and the automobile industry is likely to touch $1 billion in the current fiscal year, industry sources told Daily Times here on Friday.
Pakistani car manufacturers and assemblers have so far failed to increase their production capacity up to 100 percent in the current fiscal year. During July-April 2004-05, car production surged by 26.6 percent to 99,992 units compared to 78,993 units manufactured in the same period last year.
In the budget 2004-05, the prime minister announced 50 percent duties on the import of new car to bridge the demand and supply gap.
The Central Board of Revenue (CBR), through a notification, reduced the depreciation cost on the import of used cars in July, a step which was rejected by importers. The CBR withdrew its notification in November 2004, allowing the previous depreciation cost on the import of used cars. On below 1300cc cars, customs and other duties are still higher while local cars having the same power engine are cheaper.
Private car dealers imported around 6,000-7,000 one-year-old cars from November till now while the automobile industry has brought 11,000 to 12,000 new cars from Korea, Japan, Dubai and other states to meet the demand of local customers. While other vehicles such as trackers and trucks have also been imported during this period.
H.M. Shahzad, chairman of the All Pakistan Motor Dealers Association, said the demand for four-wheelers is increasing rapidly because of the cheap lending from financial institutions and leasing companies, but the production of new cars has been stagnant for the last two years.
He said: “Approximately, the total demand for new and used cars will be around 250,000 units in the country, and the production will be around 120,000.
“Car assemblers have the confirmed order for 120,000 vehicles with an estimated advance cash payment of Rs 120 billion against these orders.”
He said the import of vehicles would increase further as the local assemblers despite all efforts had not been able to meet the domestic demand.
He said the demand and supply gap would continue to widen, allowing authorized car dealers to charge exorbitant premium from buyers.
He suggested a more liberal import policy regarding the automobile industry to expedite import of vehicles to meet the local demand, and added that duty should be further reduced on the import of automobiles.
He said the government should allow five-year-old vehicles under the gift and personal baggage scheme and commercial import as permitted under the transfer of residence scheme.
The country’s automobile industry recently allowed to import CBU from Japan and the European countries to bridge the gap. The assemblers and manufacturers were also allowed import 1350cc cars under the slab of 1300cc.
For such import, the assemblers had submitted a request to the federal government to allow import of complete units as they had totally failed to fulfill the growing demand, an industry source said.
The prime minister also inaugurated a new Revo car about a month back, producers of this car have also started booking.
APP adds: The import of automobiles has surged by 47 percent to $807.823 million during the last ten months of the current fiscal year ending on June 30, 2005.
According to the compiled data of Federal Bureau of Statistics, Pakistan imported 47,944 vehicles during July-April 2004-2005 compared to 31,609 vehicles worth $ 549.546 million in the same period last year.
The rise in the import of automobiles has been mainly due to the shortage of locally-assembled vehicles and the rising demand in the country because of car-financing facilities.
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