KARACHI, Oct 24: Some 7,000 used cars have been imported under various schemes during the last four months. Dealers, however, predict a fall in import of used cars in the current fiscal as compared to last year when import of used cars touched over 45,000 units.
The liberal regime for import of second-hand cars was changed in the budget by stopping import of vehicles that are more than five years old. This has resulted in slowdown in imports of used cars.
The market still has excess inventory of unsold imported used cars that are parked at the showrooms. Dealers think that import of used cars will range 15,000-20,000 units in 2006-07.
All Pakistan Motor Dealers Association (APMDA) Chairman H.M. Shahzad was not upbeat about import of used cars this year owing to change in import policy by the government.
Cut in import duties over the last two years coupled with increase in depreciation rates to two per cent per month for 24 month old small cars and general liberalisation of personal baggage rules had flooded the auto market with used cars. Nearly 60 per cent of the imported cars were of Toyota.
“The demand for imported used cars is falling and dealers are offering the vehicles at low prices sometimes below the landed cost to clear their stocks,” another dealer said, adding that used cars had low re-sale value and there were problems in parts availability.
However, Shahzad said that import of used cars had not completely been stopped as dealers were still bringing in cars but in very limited numbers as compared to last year.
He did not see a big negative impact of car imports on the local car industry in the last two years. He claimed that Pak Suzuki still had 90,000 units booking in hand while Toyota and Honda had 30,000 units each in booking.
Mohammad Sohail of Jehangir Siddiqui Research said that imports of used cars would drop by 50 per cent in the current fiscal as compared to last year. “Perhaps people now understand some problems in buying used cars like rising fuel consumption, spare parts problems, re-sale value and wear and tear issue,” he said, adding that budgetary condition of allowing those cars that are not older than five year under Transfer of Residence (TR) Scheme is also hampering free import of used cars.
“One can gauge the success (in negative sense) of used imported vehicles as a builder in an advertisement now offers a mini Pajero on booking of each apartment,” Sohail said.
However, he said that reduction in used car imports did not mean that the local industry would have a party time. They were already facing a slowdown in the growth which used to be 30-40 per cent every month in terms of production and sales.
“I think the growth will range between 15-20pc as the local industry will be facing stiff challenges in coming months due to increase in competition in the market coupled with rising interest rates.
He said car delivery timings and premiums on spot sales of locally assembled cars had been falling owing to rising production capacity by the local industry.
