17 February 2004	Tuesday	25 Zilhaj 1424

KARACHI, Feb 16: The cabinet's decision to approve import of used and new cars of lower engine capacity has caused a decline of eight to 13 per cent in share prices of three Japanese and one Korean car companies at the Karachi Stock Exchange.

The decline in share prices of these assemblers was witnessed the very next day - after the cabinet's approval of a proposal last Thursday. Dewan Motors, makers of Hyundai Santro and some Kia models, lost most in the capital market.

Dewan Motors share price slipped to Rs33.60 on Monday (Feb 16) from Rs38.65 on February 12, showing a fall of 13.1 per cent, while the share of Honda Atlas Cars - makers of Civic and City - fell by 8.6 per cent to Rs70 from Rs76.60.

Pak Suzuki Motor Company Limited, whose scrip was available at Rs158 on February 11, recorded a fall of 8.2 per cent to Rs145 on Monday.

The share of Indus Motors Company, producer of Toyota Corolla and Daihatsu cars, also registered a decline of six per cent to Rs110.90 on Monday from Rs117.95 on Thursday last.

Head Research at Invest Capital and Securities, Mohammad Sohail observes that shares of the four assemblers have not suffered a big jolt as expected earlier because investors think that the government will come out with a balanced policy that may not affect the local car assemblers severely.

He said that real threat to the assemblers was from the decision to allow import of reconditioned cars.

Meanwhile, Pak Suzuki Motor Company managing director Y. Suzuki commenting on the cabinet's approval to cut import duties on used cars, CBU cars and CKD kits of small cars, said that so far there was no official notification from the government. "We will be responding to this decision on receipt of its content and real intention," he added.

Mr Suzuki said if the tone of media report was true and correct, it would definitely make the local car market unstable and disturb "our efforts for further increasing production and supply."

The industry may miss a great opportunity to capture the long-awaited substantial growth of the industry that has just started to take a visible shape and to provide a vast opportunity for employment, he told Dawn.

In reply to a query about the company's intention to shelve its future investment and expansion plan, he said: "Pak Suzuki's investment of Rs1.3 billion has already taken a concrete shape of its initial stage. This arrangement will never be put on hold."

The company and its 180 vendors, Mr Suzuki said, believed in the essential requirement for the local automobile industry in this country. "If the government differs in this fundamental concept, they are requested to immediately inform us of the change in their policy and guide us to a desired direction," he said adding, nonetheless, there might be another scenario for those potential investors, foreign or domestic, who are eyeing Pakistan with a certain substantial scale of investment.

Mr Suzuki said the Pakistan Automotive Manufacturers Association was very carefully examining the situation and would respond accordingly.

He said after the cabinet decision, many visitors at the dealership were inquiring about the expected outcome. "As far as buying is concerned, genuine customers seem not to be affected that much and are making routine purchases.

The Pak Suzuki MD said premiums on new cars had gone down by about 20-30 per cent. "No doubt this is a direct repercussion to the government decision, but I feel that the ever-enhanced supply by all the brands must be contributing to from behind."

In response to a query that what Pak Suzuki would suggest the government with reference to the cabinet approval, he said: "We would like to wait for some consultations to be concluded by the industry."

What the industry has to emphasize the government that the automobile industry is the mother industry in Pakistan and pivotal for the socio-economic development of the country in the years to come. And also some one million people are now getting their daily living from this industry.

He said the question was that under the current favourable situation, should assemblers strive further to increase the number of people engaged in the industry or ignore the years of hard efforts and jeopardize the development of the industry and of economy in order just to meet with the demand of some buyers who were screaming about the two to three months waiting period.