KARACHI, Feb 12: The auto market has started witnessing gradual improvement in demand for newly-launched models of local cars after a sharp fall in arrivals of imported used cars.

The market is abuzz with reports that the car assemblers have artificially been keeping production low despite pick up in demand encouraging their authorised dealers to charge ‘own money’ on spot buying from willing buyers of these latest models.

A random market survey reveals that the ‘own money’ on the new model of Honda City ranges between Rs60,000-Rs100,000 on spot buying at the showrooms. However, if a customer wants to book the car he will get the delivery no earlier than in April/May.

Similarly, the ‘own money’ on Toyota Corolla XLI hovers between Rs10,000-Rs15,000 despite the fact its authorised dealers assure the delivery of cars in two to three weeks through advance booking.

The premium money being charged on Corolla GLI ranges between Rs50,000-Rs60,000. Buyers will get the delivery of GLI in two months from the date of booking.

Honda City has been launched at Rs1,319,000, while Corolla XLI and GLI carry price tags of Rs1,269,000 and Rs1,389,000 respectively.

Market sources said dealers started charging premium or ‘own money’ on these new cars since the import of used cars had come to zero after the government’s decision to reduce the depreciation on the taxes and import value of used cars to one per cent from two per cent.

They said that many customers who waited for launch of these latest models were on buying spree. Besides there was also a price difference of Rs50,000 in Corolla XLI and New Honda City. Earlier, Honda City used to cost less than Toyota Corolla.

Sources said the premium on Corolla XLI in Punjab was reported to ranging between Rs50,000-Rs100,000. They said that landlords and big growers along with their family members were visiting showrooms and trying their best to have the new car on spot even if they had to pay extra money.

Some authorised dealers, on condition of anonymity, said that the demand of locally produced cars had been slow as compared to last year but there was definitely some improvement in the last one month.

Market reports suggest that authorised showroom owners of Toyota Corolla used to get the booking of 25-30 vehicles per day last year when the car leasing was over 70 per cent of the total sales. Now they are getting 8-10 orders of booking per day when car financing rates had increased substantial followed by increase in prices. In Cuore they are getting only one or two booking as compared to 10-15 per day last year.

General Secretary of All Pakistan Motor Dealers Association Khalid Yousuf offered a different view on charging of premiums. He said on Corolla GLI the ‘own money’ was over Rs100,000 while on XLI it ranged between Rs75,000-Rs80,000. The premium being charged on spot sales of new Honda City was Rs60,000-Rs100,000.

He said lamented the assemblers were not taking any action against their authorised dealers who were involved in demanding ‘own money’ on spot buying.

He added that assemblers had become active by creating a demand and supply gap as they knew that import of used cars had already stopped and people would definitely buy the locally-made cars.

He said in a bid to facilitate local assemblers the government through various measures had almost put the import of used cars at a standstill.

Import of used vehicles in 2005-2006 stood at 56,653 units in which the government had collected revenue of Rs15 billion. The import fell to 30,702 units in 2006-2007 (Rs9 billion revenue earned by the government) and it further dropped to 19,232 units in 2007-2008 (Rs8.8 billion revenue). In July-December 2008-09, the government collected only Rs2.8 billion on imports of 4,624 units only.

He said the government had imposed 50 per cent regulatory duty on import of used cars and enhanced the customs duty by 20 per cent. There is 250 per cent import duty on used cars which was 130 per cent in 2007-2008. “After cut in depreciation, there will be no imports of used cars in the current fiscal year,” he added.