Car sales continue to slump, decline by 8%
By Mushfiq Ahmad
KARACHI: The sale of cars declined by 8 percent during the first 10 months of the current financial year, figures released by the assemblers’ association show.
The local car assemblers managed to sell only 120,859 units in July-April period of this fiscal year compared to 131,962 units sold in the same period of last financial year.
The sale of cars declined to 13,597 in April from 13,871 units in March.
This decline in April is primarily due to product price increase by almost all local auto assemblers. The prices have been revised upward to pass on the impact of rising costs to the end consumers, claim the assemblers.
“Even the extension of 2.5 percent withholding tax (WHT) exemption till Jun 30, 2008 was not able to support the declining sales,” said Bilal Hameed, an analyst at JS Research.
The sale of cars and light commercial vehicles, combined fell by 5 percent to 153,846 units from 162,462 units. Their sale in April dropped to 17,259 units from 17,532 in March.
The share break up for cars and LCVs in auto sales is 79 percent and 21 percent, respectively.
The sale of cars and LCVs have been on a declining course, although the government had restricted the import of cars to units not older than three years in the budget announced for 2007-08. In the beginning of this fiscal year, when the sale of automobiles started falling, the assemblers had blamed it on the imposition of 2.5 percent withholding tax on purchase of new cars. Although the government suspended the collection of levy in February for two months and then extended the suspension till June 30, the sales continues to decline.
Moreover, the question arises why should a tax on purchase of cars be suspended at all. Is it a basic necessity of life? Definitely not! Instead of suspending taxes on purchase of such luxurious items, the government should remove duties on those items which are essential for survival.
Besides, keeping in view the condition of our roads, which are perennially clogged, from morning to late evening, is it a prudent policy to continue to allow factories to churn out cars in tens of thousands every month?
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