KARACHI, June 21: The government's decision to force assemblers to sell vehicles to holders of national tax number (NTN) card only has pushed the car sales down as the makers see the new directive as a main irritant to their future sales.

Many authorized dealers are reporting a phenomenal decline in car bookings as majority of buyers do not have NTN numbers. A Toyota dealer said that the booking had declined by over 60 per cent. He said only those buyers are being entertained who have genuine NTN numbers. Otherwise, car dealers are offering excuses to the buyers having no NTN cards.

The finance ministry issued an SRO 453(I)/2004 on June 12. Its clause IX reads: "The manufacturer-cum-assembler of automotive vehicles enumerated at serial No 3 to 6 of Table-1 shall sell the said vehicles to an NTN holder only and record of the same shall be furnished to the CBR or to any other designated person on monthly basis."

Some authorized dealers said they were taking provisional car bookings from the buyers (who do not have NTN numbers) on the condition that vehicle delivery would only be possible after the provision of NTN card.

Analysts say the government's move is aimed at checking black marketing of newly-assembled cars, besides discouraging those investors who book cars in lot through fake names. The move is also aimed at expanding the tax net by bringing rich buyers in the net.

"We are making only provisional booking of new cars from non- NTN car holders who will have to provide the card at the time of delivery otherwise car will not be delivered," general manager marketing, Pak Suzuki Motors Company Limited, Ashfaq Hussain, told Dawn on Monday.

"There are many people and organizations who do not have NTN because their income is not subject to income tax. Such types of customers include farmers, growers, housewives, families of Pakistanis working abroad, government departments like Defence, etc.," he said.

"Surprisingly, this NTN requirement is not applicable in case of new/used imported vehicles sold in Pakistan," he said while referring to a letter of Pak Suzuki addressed to the CBR.

Mr Hussain said that no customer would obtain an NTN number just to buy locally assembled vehicles instead he would buy an imported vehicle. The market is abuzz with the news that the government is also considering pressurising the car assemblers to suspend the delivery to those persons (having no NTN number) who had booked cars two to four months back and their deliveries are due in July or August.

Such types of customers will get the delivery on providing the NTN card only. The Suzuki official said under such budgetary measures, the assemblers would now be able to sell cars to only 10 per cent of the country's population because 90 per cent of them did not hold the NTN card.

He said there was a complete unrest in the auto industry, which was already perturbed over another government's decision of cutting import duty on new cars. Our Staff Reporter from Lahore adds: The condition that anyone purchasing a car needs to have an NTN will slow down the sales, say sources in the auto vending industry.

"It means that quite a large number of people associated with agriculture would not be able to buy a car if the condition is actually imposed as most of them do not pay taxes nor have NTN," the sources told Dawn on Monday.

They said the condition was unfair and would hit the industry hard like other measures announced by Finance Minister Shaukat Aziz in his budget speech earlier this month.

They said the details of the government decision to reduce import duty on completely built units (CBU) of cars indicate that the new policy would in fact facilitate import of low quality, used cars instead of reducing prices of new vehicles.

The government is said to have hinted that the procedures would be streamlined and made easier to enable the expatriate Pakistanis bring in cars under the transfer of residence scheme.

The budgetary measures reduced the duty protection to the local car manufacturers by a considerable margin. In the most popular 800-1300cc engine capacity cars, the effective duty protection has been reduced to just 15 per cent.

The CBU now can be imported at a duty rate of 50 per cent ad valorem, the sources said. While the CKDs for the same engine capacity cars are imported at 35 per cent. The purpose of the reduction in duties on imported cars is to force local car makers reduce their prices and slash the delivery time.

The auto industry may still have some price differential in the 1300cc cars if the vehicles of same make and quality are imported. "But if lower quality cars from Eastern Europe or China are brought in, the situation could really be hard for the local assemblers," leading vendors said.

The locally manufactured 800-1000cc cars that have the largest market share will be worst hit as manufacturers in China can send thousand of units into Pakistan market, they say.

They insisted that the import of used cars would pose the real challenge to the local assemblers as it would allow misuse of the transfer of residence scheme. "The new government policy will discourage the vendor industry that has made progress and contributed to the deletion programme.

Either the government has no clear policy direction or the planners have failed to see the cumulative impact of the changes in duty structure," the vendors commented.