No demand for cars despite easing lockdowns

Published May 15, 2020
Dealership owners usually experience brisk sales ahead of Eid every year. — Reuters/File
Dealership owners usually experience brisk sales ahead of Eid every year. — Reuters/File

KARACHI: The opening of authorised car showrooms from Monday after easing of lockdowns has not generated any fresh booking of locally-assembled cars.

Dealership owners usually experience brisk sales ahead of Eid every year as many people prefer to purchase new cars either by booking months ahead to get timely delivery before Eid or paying ‘heavy on money’ to buy on spot at showrooms. However, the pandemic has dried up the demand for cars.

“Neither online booking is attracting buyers nor are customers visiting dealerships in larger numbers despite easing of lockdown,” Honda Atlas’s authorised showroom owner Shabbir Alibhai said on Thursday while adding that “workshop activities are gaining momentum which is understandable after two months of lockdown.”

Abiding by the standard operating procedures (SoPs), the dealerships are only calling some of their staff to work at offices and are refusing to accept vehicles for repairs in large numbers, he said.

“I got a booking for one vehicle in the last two days as compared to an average of five to six vehicles a day prior to lock down,” he said.

Manufacturers continue to raise prices

“With already zero car sales in April, a similar decline in sales during the month of May will be a severe blow to the automobile industry,” he said while adding that assemblers have missed sales targets in April and May. In addition to coronavirus fears, sales have become further depressed after recent increase in car prices by assemblers on rupee-dollar parity, while low interest rates are yet to lure buyers in larger numbers.

The auto sector is expected to collapse if the current trend continues. The government can help the sector by bringing down duties and taxes on cars. Cuts in duties and taxes would bring down prices and attract some customers to keep industries rolling, Shabbir said, adding that “so far, there have been no worker layoffs at showrooms and employees have been getting full salaries.”

He said that assemblers need to bring down domestic car prices by negotiating lower prices for completely knocked down.

An Indus Motor Company (IMC) official said that “sales during May are so far zero and the situation is really bad despite no layoffs and salaries cut.” An official in another Japanese-assembled car showroom said online booking has remained negligible as people usually make inquiries rather than booking a vehicle.

“We have been operating showrooms with less than half of the actual workforce since opening from Monday,” he said adding the overall activity at showrooms like fresh booking of cars, repair, maintenance, etc is hardly 10 per cent of what it was before the pandemic. He said the management has so far not shown exit doors to any of its employees and salaries have not been cut. Meanwhile, some of the customers, who are booking vehicles are getting delivery time in August, he added.

Despite zero production and sales and plant closure for the last two months, the IMC and Honda Atlas Cars Limited raised car prices by Rs110,000-500,000 and Rs60,000-120,000.

Assemblers made a clever move to raise prices ahead of budget FY21 as any duty and tax cut in the upcoming budget would force assemblers to bring down prices.

Published in Dawn, May 15th, 2020

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