KARACHI, Oct 11: Auto assemblers have expressed concern over the lingering slowdown in car sales, which further plummeted by 51 per cent during July-Sept 2008-09 to 19,066 units as compared to 39,297 units in the same period last year.

If overall car and light commercial vehicle (LCV) sales are taken into account, it plunged by 44 per cent to 27,034 units in the current first quarter compared to 48,559 units in the corresponding period of last year, figures quoted by JS Research based on the data compiled by Pakistan Automotive Manufacturers Association (PAMA) revealed.

In July-August 2008 the car and LCV sales had fallen by 50 per cent to 16,996 units as compared to 33,960 units in the same period of last year. Besides, the industry car sales had dropped by 60 per cent in July-August 2008 to 11,177 units from 28,225 units in the corresponding period of 2007.

A leading car assembler, who asked not to be named, said that the current economic and political upheaval had combined to divert the prospective buyers of new cars.

The people are now more concerned about meeting their food requirements in times of high inflationary trend in food prices rather than interested in purchasing new cars.

Mohammad Sohail of JS Group said that increase in car financing rates to 24-25 per cent from 11-12 per cent two years back, imposition of five per cent federal excise duty (FED) on sale of vehicles, increase in sales tax rate by one per cent, and increase in prices by assemblers have combined to cause a slowdown in sales.

He said that consumers usually stopped purchasing luxury items when there are negative economic indicators and price of essential items continues to surge, resulting in shrinking buying power.

“I think that the sales will decline by 30-40 per cent in the current fiscal year,” he said adding that assemblers are likely to witness slackness in sales for one or two years.

Banks and leasing companies have also become cautious in financing cars following strict instructions from the State Bank after rising cases of defaults on monthly installments. There is a lack of financing facility right now.

He said that the import of used cars has been falling owing to the weakening strength of the rupee against the dollar making the imports costlier.

However, there was slight increase in car sales in September to 7,889 units as compared to 6,433 units in August, which was due to increase in sales of Toyota Corolla after its launched a new model. There s also increase in sales of Dewan Farooqui Motors in September as compared to August, he added.

Another car assembler said that the corporate sector had also curtailed their capital expenditure, which also includes purchasing of new cars. He said in many companies the period for replacement of old cars has been extended to five years from four years.

He said that there was no impact of the current economic meltdown in the US and Europe on the local car industry as car sales had been depressed since July owing to multiple reasons.