KARACHI, Jan 31: The local vendor industry suffered a loss of Rs1.4-1.5 billion during July-December 2006 on account of import of 7,000-7,500 used cars in Pakistan.

Based on the estimated cost of vendor parts per vehicle of Rs200,000, the industry suffered Rs9 billion loss in 2005-2006 due to import of 46,278 used cars. Market reports suggest that import of used cars may range 15,000-20,000 units by the end of current fiscal year as more shipments are in the pipeline which means that vendors may suffer around Rs3 billion loss in 2006-2007.

However, losses have been contained in the first six months of 2006-2007 as compared to 2005-2006 because of restrictions placed by the government on allowing used cars of not older than five years, coupled with a huge pile of unsold stocks of used vehicles imported in 2005-2006 which are parked at showrooms.

Vendors now appear highly concerned over slowdown in sales of some locally assembled cars, saying it also was a loss at the domestic level while the industry had seen negative repercussions of used cars’ imports during the last one-and-a-half year.

Chairman, Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), Shariq Suhail, said the association, in a presentation, had informed the government about the negative impact of used cars on the vendor industry.

He said Honda City, Honda Civic, Suzuki Liana, Toyota Altis, Toyota Diesel and Hyundai Santro have been facing sales drop because of huge presence of used Toyota Corolla, Accord, Toyota Platz, Toyota Vitz, Toyota Prado, Land Cruisers, Pajero, Terios, Harrier, Hilux Surf etc.Shariq said the slowdown in car sales is likely to persist during the January-December 2007 period as interest rates are not likely to come down, which now range 18-20 per cent as compared to eight to nine per cent one-and-a-half-year back. Besides, there is also a glut of used cars, and showroom owners are now offering discounts to buyers in order to clear their stocks.

He urged the government to follow the policies adopted by the other countries of the region which are protecting the auto industry from unfair protection.