KARACHI, Jan 2: The State Bank of Pakistan (SBP) has projected the demand of car to reach 115,186 units in the year 2004-2005 followed by motorcycles to 416,857 units in the same fiscal.

The demand for pick-ups, buses, trucks and tractors are also projected to rise to 21,335, 2,210, 3,168 and 30,307 units respectively in 2004-2005, the Central Bank's first quarterly report for 2003-2004 said.

The State Bank report said that the contribution of consumer finance is most evident in the automobile sector, in which the sale of passenger vehicles (cars and motorcycles) has accelerated since the third quarter of 2001-2002 following the aggressive marketing of auto loans by banks and leasing companies.

The sustained growth in the demand for passenger vehicles has engendered very positive demand projections, leading to the induction of additional capacity during first quarter 2002-2003 as well as planned investments totalling Rs19 billion to meet the projected demand, the report said.

The bank said that while a Chinese company (Dong Feng) in collaboration with Sindh Engineering Limited (SEL) and few motorcycle and rickshaw manufacturers has already started production, the establishment of five more plants (motorcycles and auto rickshaw manufacturing) has been allowed by the indigenisation committee of the Engineering Development Board (EDB).

The report said that the sale of commercial vehicles did not match the consumer finance-led rise in sales of passenger vehicles. In fact, production of buses and light commercial vehicles (LCVs) sale declined relative to first quarter of 2002- 2003, probably reflecting higher imports and the impact of the take-over of Sindh Engineering Limited by a Chinese company.

The impact, the report added, of this slowdown was partially offset by the higher production of trucks and tractors.