KARACHI, Dec 3: The clearance of over 700 cars under the gift and transfer of residence scheme (TRS) during July-November 2004 from ports has not made any major impact on the market as majority of cars are of over 1800cc engines with high price tags which are far beyond the budgets of ordinary buyers.

About 200 cars out of 700 are of below 1800cc engine capacity, which means that prospective buyers of small cars, who are at the mercy of local assemblers, will have to wait for arrivals of low engine capacity cars. Over 300 cars are still awaiting clearance, but majority of cars are of higher engine capacity.

Showrooms at Khalid Bin Waleed Road are beaming with colourful and stylish imported cars of various engine capacities, while some showrooms at Sharea Faisal and University Road have also put on display imported cars.

Top government managers have been trumpeting for the past few months for allowing import of used cars in an effort to bridge the demand and supply gap, besides eliminating the menace of long delivery schedules and high premium being charged on the locally-assembled cars.

However, in reality, the government has allowed the import of used cars under the TR and gift scheme in such a way that local assemblers will not be hurt due to the policy glitch that encourages higher engine capacity cars.

So far the government has failed to address the problem of demand and supply being created artificially by the local assemblers and as a result, locally-assembled cars are either being delivered in several months or readily available on spot sale at high premiums.

Karachi Motor Dealers Association (AKMDA) Chairman H.M. Shahzad said that over 1,000 cars were arriving in the current month followed by expected arrival of around 5,000 cars during January-June 2005.

The exchequer received Rs2 billion from the import of about 1,000 cars during July-November, he said. "The government has not given any incentives in the budget to encourage import of 800-1000cc cars which the country badly needs at this moment."

Mr Shahzad attributed the slow arrival of imported cars to the bottlenecks created by customs officials in connivance with the assemblers by issuing controversial Customs General Order (CGO) soon after the government's budgetary decision of allowing import of used cars.

Because of the CGO, clearance of cars from the ports remained suspended for one-and-a-half months. Somehow, imported cars started getting clearance after the issuance of CGO, but again it was put on hold for the second time.

The issue later resolved through a meeting with the CBR. Finally the CGO has been reissued in the shape of SRO last month. He said the customs officials were still trying to create problems in the clearance by carving out various issues regarding permission for import.

Mr Shahzad urged the government to allow depreciation of 50 per cent on all cars arriving under the TR and gift scheme, besides allowing import of five-year-old cars so that general public could avail the benefit of used car imports.

Sarfaraz Hussain Dhanji of Aristocars also reckoned that the government's decision of allowing used car imports under the TR and gift scheme had made a very little impact in the market. However, he said the buyers have started buying one-and-a-half-year to two-year-old cars - both small and high engine capacities.

He said cars of 650cc-1000cc like Suzuki Alto, Toyota Vitz, Toyota Platz, Daihatsu Caper, Daihatsu Kid, Suzuki Gimny, etc., had landed in Pakistan at prices ranging between Rs700,000 and Rs900,000.

Similarly, cars of above 1000cc to 1800cc like Honda Civic, Toyota Corolla, Celica, Toyota MRS, Toyota Premera, etc., are available in the price range of Rs1.2-2.0m, while Mercedes can be purchased at Rs2.5 million.

Mr Dhanji said the government's decision would only benefit the dealers instead of general public who should be freely allowed to open letter of credits in order to import cars of their choice.

He urged the government to also allow the import of used cars on commercial basis, besides keeping the current schemes of TR, baggage and gift intact. On the other hand, the issue of high premiums and late delivery still remains unresolved.

Market sources said that chances of complete elimination of these two most pressing issues were slim due to persistence increase in demand coupled with delivery dates of three to six months being given by the authorised dealers to the customers on the booking of new cars.

The government's effort of binding assemblers to sell cars only to the holders national tax numbers (NTN) has failed to eliminate the issue of premium. The market sources said that some people who had purchased cars through NTN had now indulged in selling cars at premium rates.