KARACHI, Oct 16: Auto assemblers, while expressing their concern over the proposal of Task Force for cutting import duty on new cars by 50 per cent, have urged the government to consult with the auto industry before taking any final decision regarding car imports.

They fear collapse of future investment plans of the assemblers as well as loss of millions of jobs and sheer destruction of the vendor industry in case the car import policy liberalizes.

“The government should give time to the industry before implementing any decision about allowing car imports. We are following the government’s instructions properly on rising production and controlling the issue of premiums,” general manager marketing, Pak Suzuki Motors, Ashfaq Hussain, told Dawn.

“Things will come under control by the end of December or early January,” he said while referring to the rising trend in car production that will help eliminate the menace of premium.

“It is too early to take any decision on allowing import of cars,” he said while disagreeing over the Task Force proposal of cutting import duties.

Import duty on cars up to 800-1,000cc is 75 per cent, while rate of duty on 1,000-1,500cc is 100 per cent and 125 per cent on above 1,500-1,800cc.

He did not agree that the import of cars would help in shrinking the gap between demand and supply. He said that the immediate problem towards high demand of cars was unlikely to solve through imports as it took at least three months to bring a car from a foreign destination. “What is the surety that the car imports will cope with the current demand and supply situation,” he added.

“The main sufferer of the car import will be the vending industry where over a million people are engaged directly or indirectly,” Ashfaq Hussain said.

Pak Suzuki is rolling out an average of 5,000 cars (all models) in a month as compared to 2,500 cars a year back. The company has recruited 150 persons in the last two months after starting double shift production. The company plans to invest Rs1.3 billion in the next two years, he said.

According to him, consumers had to wait three to four months for Mehran, two months for Alto 100cc and two to three months for Cultus and Baleno. The company pays mark-up to the customers for not delivering cars in two months as per the government’s instruction.

He said the company was taking the new booking on a very limited note owing to backlog of old bookings of two to two-and-a-half months, which was to be cleared by the end of this year, he added.

The company has issued warning letters to its authorized dealers. Besides, the company’s inspection teams are also strictly visiting the dealers to check the malpractice. “We found some irregularities but not to that extent. Actually we cannot check the investors as there is no yardstick for it,” he added.

Another leading Japanese car assembler also urged the government to give time to the industry before finalizing any decision on opening car imports.

Indus Motor Company (IMC) has also increased its manpower to around 1,200 from 600 following the introduction of new Corolla and start of double shift production.

IMC has invested Rs400 million in the last two years on production enhancement and it plans to invest Rs4-5 billion to set up a manufacturing plant in case government’s economic policies continue, a senior IMC official said.

Fariha Tayeb, auto analyst at Capital One Equities Research, feels that any cut in import duty on cars would have a fairly immediate negative impact on the profitability of the producers and will become a competition of survival of the fittest. The government needs to have a long-term platform regarding import duties on automobiles and the government should concentrate on formulating a road map for gradually phasing out these duties (especially with WTO nearing), he added.