KARACHI, March 8: The local car assemblers want the government to continue their present automobile policy for at least next five years during which they would be able to achieve hundred per cent deletion and also make the industry export worthy.

"Car prices and delivery schedule will be stabilized in next six months to one year," a leading car assembler told Dawn by telephone on Monday. The car assemblers are meeting the finance minister Shaukat Aziz on Wednesday and representatives of 600 vendor units on Tuesday to plead for the continuation of the present automobile policy.

"Any change in the present policy will ruin the automobile industry and put on hold the flow of direct foreign investment in Pakistan," he stated.

Japan, the main foreign investor in Pakistan's automobile industry is reported to have been given a firm assurance about two and a half years ago at the highest level on long term consistency of the automobile policy. "That assurance brought about Rs15 to Rs20 billion foreign investment in Pakistan in last two and a half years," he said.

Two federal cabinet ministers are being named for pleading forcefully the case of importers of reconditioned cars in Pakistan. One of them has strong Dubai connections.

"At least 5,000 to 7,000 used cars are in Dubai for immediate shipment into Pakistan once the green signal is given," a leading car assembler informed Dawn on condition of anonymity.

Car assemblers say that the government dropped a broad hint of importing new and old cars about a month ago after a meeting of the ministers and top bureaucrats, which was chaired by the Prime Minister.

"No one from the finance ministry-finance minister, secretary, governor State Bank of Pakistan or any senior functionary-was present in the meeting," a car assembler recalled.

He wondered as to how a decision which has far-reaching financial implications can be taken without consulting anyone from the finance ministry or the State Bank.

This indication of opening automobile market for new and old cars came in context of reviewing a report prepared by a Task Force, which was headed by the federal industries secretary Javed Ashraf.

"The Task Force does not recommend the import of second hand and reconditioned cars as it would retard the growth of local industry, adversely affect the vendor industry, create a recurring liability on Pakistan on account of import of spare parts, it will be a major drain on foreign exchange and will replace the locally-made second hand cars and will negatively affect the local reconditioning business," according to a copy of the report of the Task Force.

According to the Task Force report Pakistan's automobile industry has achieved 70.25 per cent indigenisation in cars up to 800cc, 61 per cent up to 1,000cc and 56 per cent above 1,200cc cars.

"It is true, we do not manufacture carburettor and other hi-tech automobile parts," confessed one of the car assemblers. He was, however, confident that if the industry is allowed to operate in present environment "we will achieve 100 per cent localization within five years."

Car assemblers say that WTO regime has enough built-in protective mechanism for the local engineering industry. "All such provisions have been invoked by Malaysia, Thailand and India," he said while asserting Pakistan has all the right to protect its industry.

India does import reconditioned cars on "156 per cent duty" and this import is confined to a selected list of engines and models, the assemblers say. Automobile industry made its appearance in Pakistan in 50s when General Motors launched assembling of Bedford trucks and busses.

In 60s during Ayub Khan regime General Motors became Gandhara Industries and expanded assembly business to other makes of Vauxhall, Ford Perfect, Ford Cortina, and Dodge and Dart cars.

Indigenisation process began in 70s during ZA Bhutto government when public sector corporation, PACO, took up localization of Bedford trucks and buses. This programme was extended during 80s and beyond in 90s when private sector also made its appearance.

The current investment in car assembling plants is Rs14.8 billion. In about 600 odd vendor units Rs26.2 billion is invested. The industry expects flow of another Rs4 billion in two assembling plants Nissan and Mitsubishi in next two years.

These companies are expected to assemble about 20,000 units a year of 1,800cc to 2,000cc. Another investment of Rs15 billion is expected in vendor units. It will bring total of Rs60 billion investment in automobile industry.

At present the local industry assembles 20 models of small and big cars and boasts of doubling its production to about 100,000 units in just three years period. This production is expected to touch 115,000 to 120,000 units a year figure in next two years.

Car assemblers say that the Task Force found prices of Pakistani cars comparable with that of India despite the fact that Indian rupee has higher value vis-a-vis dollar than that of Pakistan and hence import cost is less.

The impact of taxation and duties in Pakistan is higher than in India. And then India has a market of about 800,000 units a year compared to 100,000 units in Pakistan.

Following appreciation of rupee value against dollars, the car assemblers say that the premium cost on Pakistani cars have also come down appreciably and is showing a downward trend.