October 21, 2003	Tuesday	Sha'aban 24, 1424

KARACHI, Oct 20: Despite 60 per cent rise in production of cars in July-September 2003-2004, the issues of charging premiums on locally assembled cars coupled with late delivery to the customers still linger on.

Customers are still getting not less than three months delivery time for the new booked cars and many dealers are giving delivery time of cars ranging between six to eight months specially in higher engine capacity cars.

The rate of premium has, however, now been on the decline for the last two months amid uncertainty over cut in car import duty as recommended by the Task Force. The menace of charging premiums still looms large despite marked increase in production. On the other hand, increase in production has played some role in bringing down the on-rate on new cars.

The rate of premium on Toyota Corolla still ranges between Rs50,000-80,000 depending on the model, while premium on Honda City hovers between Rs65,000-70,000. On various Suzuki models, dealers are claiming Rs15,000-35,000 as premium depending on the models and colours.

An auto analyst at Invest Capital and Securities said that owing to the seemingly serious nature of the Task Force’s recommendations, immediate delivery premiums have also reportedly fallen by around 30-60 per cent depending on the make and model.

Meanwhile, cheap auto financing by banks and leasing companies remained a chief factor in maintaining buyers’ enthusiasm towards purchasing new cars.

Car production and sales jumped by 74 and 80 per cent in September 2003 as compared to the same month of 2002.

A total of 7,934 units were produced in September 2003 as compared to 4,559 units in September 2002, while production stood at 8,596 units as against 4,780 units in September last year, figures compiled by Pakistan Automotive Manufacturers Association (PAMA) says.

The first quarter of 2003-2004 was in the grip of government’s continuous pressure on assemblers to streamline the production followed by setting up of a Task Force to look into the issue of premiums, higher prices, late delivery to the customers and news of cutting import duty on new cars.

Despite these factors, buying activity of locally assembled cars remained impressive during July-September 2003-2004, thus pushing up production and sales by 60 and 64.5 per cent as compared to same period of 2001-2002.

A total of 20,408 units were assembled coupled with sales touching to 20,944 units in the first quarter of current fiscal year as compared to production of 12,745 units and sales of 12,725 units in the same period of last fiscal year.

Production and sales of Suzuki Mehran rose to 5,872 units and 6,241 units in the first quarter of current fiscal year from 3,202 units and 3,277 units. Production and sales of Toyota Corolla surged to 3,277 units and 5,164 units from 2,592 units and 2,558 units.

Assemblers said that booking of new cars have slightly dropped in the current month over the reports of cut in car import duty, as proposed by the Task Force.

An analyst at the Khadim Ali Shah Bukhari said that the submission of the report will finally lift the uncertainty prevalent in the auto sector. He expected increased revenues and profits from the assemblers on the back of increased trading revenues.

An analyst at Invest Capital and Securities, while giving an example, said that if import duty is cut by 35 per cent on 800cc cars, the price of Chevrolet Exclusive will fall to Rs490,000-500,000 from the existing Rs600,000.

He said the government would take some time to actually decide whether to implement the Task Force’s recommendations either fully, partially or not at all. Therefore, the fate of local assemblers still remains unclear. Meanwhile, Indus Motors’ profit after tax has touched Rs451 million in the first quarter of 2003-2004 from Rs231 million in the same period of last fiscal. Revenues jumped by 77 per cent to Rs5.73 billion from Rs3.24 billion.