July 25, 2006	Tuesday	Jumadi-ul-Sani 28, 1427

KARACHI, July 24: Premiums on local cars have started climbing up. The delivery period, however, has shrunk owing to an increase in production capacity by the assemblers.

Many car dealers linked the rising premiums to a change in the import policy of cars. The budget allowed used cars import that should not be older than five years under an SRO 696(I)/2006 issued on July 1.

According to a market survey, the premium on Toyota Corolla XLi and GLi ranged between Rs50,000 and Rs60,000 as compared to Rs30,000 and Rs40,000 before the budget 2006-07. However, the delivery period of these cars has come down to two to three months.

The premium on Cuore CNG rose to Rs40,000-60,000 from only Rs30,000 before the budget. The delivery time of CNG Cuore is three months.

The premium on Suzuki Mehran CNG is Rs30,000-40,000 as compared to 15,000-20,000 in May, while the premium on Alto CNG is raised to 40,000-50,000 from 30,000. On Cultus CNG, the premium ranges between Rs50,000 and Rs60,000 as compared to Rs25,000 and Rs30,000.

All Pakistan Motor Dealers Association Chairman H.M. Shahzad said previously it was easy for dealers to bring very old used cars and there was no time restriction under the transfer of residence scheme, but now the situation had changed and the new budget only allowed import of used cars that should not be older than five years.

“It means that costly imported cars will land in Pakistan and consumers will avoid having these cars because of higher prices as compared to locally produced cars whose demand will rise,” he added.

He said the increase in premiums was due to the re-emergence of demand for local cars in the market. During the last two years to June 30, 2006, over 56,000 used cars were imported which contributed Rs22 billion in shapes of duties and taxes to the exchequer. Consumers had witnessed a wide range of varieties of used cars.

Out of total import of 45,000 cars in the last one year (2005-2006), some 30 per cent remains unsold. “Import of used cars in 2006-07 may drop to 10,000-15,000 units only in case the government does not withdraw the SRO 696(I)/2006,” Mr Shahzad feared.

“Dealers will face difficulty in finding buyers if they import costly cars. Only low or competitive prices and models of used cars will attract consumers.”

Some 4,500-5,000 cars were waiting for clearance at the port after the confusion created by the SRO, he said, adding that the SRO had created confusion among importers whose consignments were shipped in May and June but did not reach the port.

The SRO also made it mandatory for expatriates to furnish earning certificate for importing a used car under the transfer of residence scheme. This will also discourage the import of used cars.