Much to the relief of domestic car assemblers, used car imports have dropped 21% in the last fiscal year compared to the previous year, according to data for July 2012 to June 2013.
Car imports in fiscal year 2012-13 fell to 45,378 units from 55,000 units in 2011-12.
In FY12, imports of used cars hit the peak when they jumped phenomenally by 162% from just 21,000 units a year earlier, sparking worries among domestic assemblers who believed imported cars were directly hurting their sales.
The decline in imports came following the government’s decision in December 2012 to slash the age limit for import of used cars from five years to three years. According to car importers, the second half of FY13 saw a gradual decline in used car imports.
All Pakistan Motor Dealers Association Chairman HM Shahzad told The Express Tribune car imports would have been more than 55,000 units this year had the government not reduced the age limit for imports.
Despite the import slowdown, demand for locally assembled cars remained subdued as sales fell a considerable 24% to 135,310 units in FY13 compared to 179,139 units a year earlier. This indicated that Pakistanis had less appetite for cars in FY13 because sales of both imported and locally assembled vehicles decreased.
Noticeable factors that played their part in the decline in sales of locally assembled cars were discontinuation of Suzuki Alto and Daihatsu Coure production, continuous ban on CNG kits in new cars and end of the Punjab taxi scheme that had added 20,000 units to overall car sales in FY12.
Both Pak Suzuki Motor Company and Indus Motor have failed to replace their economy cars with updated versions and hence demand for used economy cars strengthened in the market.
Automobile analysts believe that apart from the above reasons for weak car sales, lower farmer income has also contributed to the falling demand.
However, they point out that restrictions on used imported cars (from December 2012 to June 2013) and improving auto financing led to a surge in sales of locally assembled cars to 77,773 units in the second half of FY13 compared to 57,540 units in the first half.
With declining sales of imported used cars and improvement in auto financing from banks, industry officials believe sales of domestic assemblers should increase in the current fiscal year.
Published in The Express Tribune, July 14th, 2013.
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