KARACHI: The Japanese yen has fallen by 30 per cent against the US dollar in almost one year, but the local auto industry and the importers of used cars have yet to share the blessings of this new exchange-rate parity with buyers.

Since January this year, the yen has fallen from 90 to a dollar to 120 now, according to a currency dealer.

The local assemblers, who are now importing cheaper parts from Japan, also did not pass on the benefit. The used-car dealers have instead jacked up prices, authorised dealers of locally produced cars argue.

Besides, the falling trend in import of used cars (up to 1,000cc category) reversed in July-Nov period as total imports rose to 7,882 units year-on-year from 6,804. This helped the government collect Rs1.7 billion in customs duties compared to Rs1.35bn in the year-ago period.

Another rise was seen in 1,601-1,800cc cars whose imports increased to 1,196 units in July-Nov compared to 965 a year ago. As a result, the government netted Rs780 million in customs duties compared to Rs560m.

The increase in the above two categories pushed up overall imports of used vehicles from 660cc to 3,000cc, including jeeps, to 10,276 units (Rs4.1bn customs duty collection) from 9,400 units (Rs3.9bn), according to the data of All Pakistan Motor Dealers Association (APMDA).

As for 1,001-1,300cc range, only 20 vehicles arrived compared to 14 units while import of 750 units of 1,301-1,500cc was registered compared to 1,142 in July-Nov 2013.

In 1,501-1,600cc, no import was recorded either in this or previous year. The import of jeeps (4x4) fell to 410 units from 456.

The import of completely built units (CBUs) went up to $95m from $81.3m, according to Pakistan Bureau of Statistics (PBS).

APMDA Chairman H.M. Shahzad said the cut in age limit of used cars to three from five years and reduction in depreciation to two years’ limit had somewhat dampened the imports, otherwise the arrivals could have been much higher.

In the latest budget, the government increased the import duties on used cars. Besides, changes in withholding tax also affected the retail price.

He said the Competition Commission of Pakistan (CCP) “has rightly exposed illegal practices of local car assemblers and their authorised dealers”. Besides, the State Bank of Pakistan (SBP) has also grilled the auto industry in its recent report.

He urged the government to investigate as to why the industry is not sharing the benefit of a weaker yen with consumers.

Shahzad foresees more imports of 660cc vehicles in the future in view of falling petrol prices. Used vehicles of 660cc and 1,000cc are popular because of their good petrol average.

Iqbal Shah, the chairman of Pakistan Authorised Manufac­turers, Assemblers and Dealers Association (PAMADA), said used-car dealers were fleecing consumers by unilaterally increasing prices as the government looked on.

For example, the average price of Prius ranged between Rs1.7m and Rs1.85m during December 2013 to February 2014, but increased to Rs2.1m to Rs2.45m in Sept-Oct 2014. The dollar was at Rs108 in Dec 2013 and slipped to as low as Rs98 this year.

The average price of Mira during Dec 2013 to Feb 2014 was Rs800,000 to 900,000, but rose to Rs1m to Rs1.1m. The Vitz was priced Rs1.2-1.27m during Dec 2013 to Feb 2014 but in Sept-Oct this year its price increased to Rs1.4m.

The average price of Passo, which was between Rs900,000 and Rs1m during Dec 2013 to Feb 2014, increased to Rs1.2m in Sept-Oct 2014. Alto’s average price of Rs900,000 to Rs950,000 during Dec 2013 to Feb 2014 has now increased to Rs1m-Rs1.1m in Sept-Oct 2014.

Shah said that even after a 10pc increase in duty on import of used cars, the government was still losing $1,950 to $3,781 on each unit. During the previous fiscal year, the government lost over $68m.

Another anomaly in SRO 499 compels the OEMs (original equipment manufacturers) to charge full 17pc general sales tax on their retail sales of hybrid vehicles from their customers, whereas used-car importers pay only half of it and enjoy high level of depreciation in duty at import stage as well, he added.

The assemblers reduced vehicle prices in response to drastic decrease in the US dollar, which fell to Rs99 from Rs108 in the first quarter of 2014.

The OEMs reduced Rs10,000 on Cultus, Rs30,000 to 40,000 on Civic, and around Rs75,000 on Corolla, but used-car dealers/importers did not pass on this benefit to customers even on stocked vehicle, the PAMADA chairman said.

However, despite high prices, buyers lifted 26,214 locally produced units in July-Nov 2014 compared to 22,821 units a year earlier.

The demand for cars in the future also appears quite brisk because of rising imports of completely knocked-down (CKD) kits by the assemblers. The import bill of CKD and semi-knocked-down (SKD) kits rose to $195m year-on-year in July-Nov 2014 from $134m.

Published in Dawn, December 26th, 2014