Lahore’s used cars market defies all laws of economics

Published: July 25, 2010
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Instead of depreciating, used cars are selling for more than their original prices

Instead of depreciating, used cars are selling for more than their original prices

LAHORE: Instead of depreciating, the prices of used cars have gone up in all major markets of the city and a 2007-model 800cc CNG car, whose original price was Rs345,000, is currently available for Rs400,000.

Saleem Butt, a car dealer in Samanabad, said that the annual depreciation rate should be around five to 10 per cent. He said that by that standard the price of a 2007-model 800cc car after two-and-a-half years should not be more than Rs300,000.

Car dealers at the Jail Road market hold the skyrocketing prices of brand new vehicles and the exponential rise in import duties of used cars responsible for the odd trend.

“The prices of brand new vehicles are too high. Mostly, the buyers have to settle for lower specifications or used cars,” Muhammad Usman, a car dealer at Jail Road said. He said that a 2007-model 1,000cc car was available in the market for Rs675,000 to Rs700,000 while the similar model brand-new vehicle would cost Rs900,000 after registration.

Usman said that earlier people used to change cars every three years but a new car had become so costly that most of them were now reluctant to sell their cars.

The car manufacturers have increased prices thrice in the last two years, sending them up by 35 to 40 per cent. At present, a brand-new 800cc car is available in the market for Rs475,000.

Muhamamd Farooq, a salesman, said that he had been saving for a whole year now but still could not afford a used car. “One cannot even think of getting a reasonable used car for Rs250,000,” he said. He added that the government should reduce the import duties on used cars to facilitate the lower-middle class. Car dealers say that the high prices of new cars have brought their businesses to a grind. Malik Muazam, a dealer at Jail Road, said, “Earleir, we were able to finalise at least two deals a day, now we hardly make two to three sales in a week.”

Zafar Iqbal, the Jail Road Traders’ Association general secretary, too said that the government should relax the import duty on used cars.

He said that it would make for greater competition and help break the monopoly of the local manufacturers. “We’re facing a severe shortage of vehicles. A simple solution is to encourage competition. The government needs to let the foreign manufacturers in,” Iqbal suggested.

In the beginning of 2010, The Competition Commission of Pakistan (CCP) had recommended that the government relax the duties on the import of used vehicles to end the monopoly of local manufactures.

Published in the Express Tribune, July 25th, 2010.

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Reader Comments (4)

  • Asim Kaleem
    Jul 25, 2010 - 4:31PM

    No less than auto mafia ………. imagine an 800CC Mehran which more like a motor bike is costing $6000 …….. sad ……. This will never change as these cartels are giving bundles of gifts to the government too ……… Recommend

  • Dr Imran
    Aug 2, 2010 - 7:11PM

    stop buying mehrans !! even after paying 0.4M what do you get .. atleast they should introduce abs and airbags as standard …Cant our govt even do that for a change… Recommend

  • Asim
    Aug 3, 2010 - 5:28PM

    Every government is more corrupt than the previous one. And the Auto manufacturers’ cartel has a field day. They gift a few Cars to the likes of Mr 10% and milk the entire country. Great Deal…Wow, so much in the name of indiginization. Since Pak-Suzuki in 1983, 27 years down we still are car assemblers and never will be manufacturers if the present trend prevails…Look at the Nano in India….Feel some shame Atlas..Indus..Dewan..Suzuki…..! Recommend

  • cidpusa
    Aug 3, 2010 - 9:25PM

    buy a motor bike , attach a third wheel and u make have your own carRecommend

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