KARACHI, Oct 14: Uncertainty over much-awaited government’s decision on the fate of auto industry and reports of opening of imports of new and used cars has caused drop in premium rate on locally assembled cars.
In another development, booking of new cars has also slowed down since people waiting for the government’s final decision, based on the recommendations of the Task Force.
A random market survey reveals that the premium on much-hyped Honda City now hovers between Rs70,000-90,000 as compared to 150,000-200,000 when it was launched a month back when the task force was set up to submit report on late delivery of cars, high prices and how to reduce the menace of premium by the authorized dealers.
The premium on Honda Civic has gone down to Rs90,000 as compared to Rs100,000-120,000 last month depending on the model and colour.
The on-money on Toyota Corollas’ various models has also dropped. For instance, the premium on SE model fully loaded, which was charged by the authorised dealers at Rs125,000, has fallen to Rs80,000 while the premium on Gli model is being charged at Rs100,000-115,000 as compared to over Rs150,000 a month back. Premium on the XLI model is being quoted at Rs95,000 as compared to Rs150,000.
However, officials in the Indus Motor Company (IMC), on condition of anonymity, claimed that the rate of premium has dropped to Rs50,000-60,000. Another official in the same company said that the premium on Corolla is being charged at Rs80,000.
He said that booking of cars has slowed down in the last one month. “I cannot give the actual per centage at this moment but there is definitely a marked slowdown in booking of Corolla,” he added.
No change was witnessed on the rate of premium on various models of Suzuki. The company has yet to open the booking of its models, which was shut down last month owing to the huge backlog of old orders. Premium on Alto 1000cc is still being charged at Rs30,000-35,000 while the on-rate on Mehran ranges between Rs25,000-38,000 depending on the colour and specifications. Authorized dealers are demanding Rs40,000-50,000 premium on Baleno while the black market rate on Cultus ranges between Rs45,000-55,000.
Daihatsu Cuore and Dewan’s Santro carry premium rate of Rs45,000-55,000.
As far as delivery period is concerned, authorized dealers are giving time on their own ranging between three months to a year as against the government’s instruction to deliver car in two months.
Both car assemblers and the used car dealers have now set their eyes on the Task Force, which has already got late in submitting its report to the government against its deadline of September 30. In the meantime, report of opening of the import of completely built up (CBU) vehicles by the government has gripped the market and prospective buyers are reconsidering their future plans to buy the cars.
A leading assembler is of the view that if the government liberalizes the import of cars, the local industry including vendors (who claim to provide jobs to over a million people), will collapse in a few months. “I think one month is enough for the industry’s damage after liberalization of import of cars,” he added.
He said assemblers under the banner of Pakistan Automotive Motors Association (PAMA) have told the Task Force officials that the local assemblers have already geared up their production besides continuing suspension of authorised dealers who are found involved in the game of premiums.
He said the assemblers have suggested to the government to enhance the transfer fee of vehicle to curb the premium as the government has some reservations on industry’s earlier proposals not to allow transfer of cars for at least six months.
In case car import is opened, he said the assemblers and the vendors will stop future investment in Pakistan which they had already made.
He claimed that the Task Force was quite satisfied with the prevailing prices of locally assembled cars. “It is wrong to open the import of cars on the political pressure,” he said that the government should look into the job avenues which the local industry has opened in the last few years.
Meanwhile, a source in the finance ministry said that it is not a bad idea to allow import of cars if there is a demand.
