AUTO MARKET EXPANSION

 

By SYED M. ASLAM
Sep 01 - 07, 2003

Easy financing at affordable interest rates, introduction of new models by the local manufacturers, presence of imported counterparts and expansion of production capacity by local manufacturers are expected to push car production, and sales, to new highs during the current fiscal.

As is, Pak Suzuki Motors, the producer of a range of cars, commercial vehicles and jeep, has announced to enhance its production capacity, it already has an installed capacity of 50,000 units per annum, that would cost it an estimated 1.3 billion rupees. Pak Suzuki, the biggest car manufacturer in Pakistan has produced over 581,000 vehicles since the first FX model rolled out of its former assembly life at West Wharf, Karachi under the joint venture with public sector Pakistan Automobile Corporation twenty years ago.

Sales at Pak Suzuki has registered an impressive increase of over 62 per cent during the first 7 months of this year over the corresponding period last year from 16,317 units to 26,474 units. The increase was lead by 1300 cc Baleno the sales of which increased by 113 per cent followed by Mehran which grew by 78 per cent. The sales of all other models produced by the company, except the Potohar Jeep and Ravi commercial truck, also increased though by less margins compared to Baleno and Mehran.

Sales at Indus Motors; the producers of Toyota Corolla cars, Hilux trucks and compact Daihatsu Cuore car, in July stood at 1,980 units depicting a growth of over 82 per cent over the comparative month last year. Sales at Indus Motors during the last fiscal depicted a strong increase of 83 per cent over the previous year from 11,066 units in fiscal 2001-2002 to 20,307 units in 2002-03 and it is expected to touch record level over 23,000 units during the current fiscal if sales figure for July is any indication. Sales at Indus are traditionally lead by Corolla which showed a strong growth of 109 per cent in 2002-03 over the previous year though sales of Hilux vehicles and Daihatsu's compact Cuore also played a vital role.

Sales at Dewan Farooque Motors, the producer of Korean Hyundai and Kia cars, also registered a healthy 58 per cent increase in July over the corresponding month last year from 386 units to 610 units.

However, Honda Atlas Cars sold 321 less units for the four months ended July 31 over the comparative period last year 2,913 units compared to 3,234 units respectively. The decreased sales can be attributed to the works underway to introduce a new model of City cars by the company earlier this month competitively priced at Rs 789,000 and Rs 839,000 for standard and automatic versions respectively. The launching of new model is expected to result in competition in the market between Honda and Corolla, the models aimed at the same segment of the market.

The face of the automobile market in Pakistan is also in the process of change with the entrance of a local manufacturer, Adam Motors which has announced to introduce 2500 cc and 2800 cc jeeps in near future. The company is already producing and marketing commercial vehicles and is expecting to fill in the demand for jeeps.

IMPORTS

In addition, completely-built-up Korean-made Daewoo Chevrolet cars are also available in the country to satiate a demand that exists for such vehicles in the local market. The vehicles are imported by Continental Assemblers (Pvt) Limited which has already managed to sold over 200 Chevrolet cars in last two months.

Talking to PAGE, Continental Assemblers (Pvt) Limited's Yunus Warind told PAGE that the company imported 200 Chevrolet 800cc cars in two batches of 100 units in mid July all of which was sold within days. "We have already sold a portion of the latest shipment of 300 units at retail price of Rs 549,000 for the standard and Rs 600,000 for the automatic version. Both of our Chevrolet models are equipped with air conditioner and tape recorder while the deluxe model is equipped with power steering, power brakes, etc."

Mr. Yunus Warind said that he expects to import a total of around 2,500-3,000 units of Daewoo Chevrolet cars during the current fiscal though 'ultimately we have plans to assemble the car locally as our name suggests." He also told PAGE that the import of the car in the CBU form is subjected to an import duty of 75 per cent, 15 per cent sales tax and 6 per cent withholding tax, the impact of which at the landed stage adds up to 115 per cent.

BLACK MARKETING

Informed sources in auto sector informed PAGE that despite the government's best efforts the black marketing of cars and their bookings on full price against the directive of the government still goes on unabated. "Almost all the local producers, particularly those who have introduced the new models, have bookings enough to keep them busy for as many as 8 months if not a year. The long wait has resulted in black marketing of cars if one wants to buy it on cash from the dealers right away. All the local brands are selling at a premium which ranges from Rs 40,000 to Rs 200,000 depending on the model and price of a particular car.

"The waiting period for the delivery of cars booked by the people runs as much as 8 months in the case of two companies producing top of the line models while in the case of the third it extends to a lesser, but still long, period of 4 months. The long delays thus has provided attractive financial incentive to the unscrupulous elements to black market the vehicles, way above the fixed price to those who don't want to wait for months for the delivery. Many call this massive overcharging as 'premium' but in fact it is downright black marketing. In addition, it is a rampant practise to book the car at Rs 100,000 but after the draw held every month by a company, the bookers are asked to pay the full retail price of the vehicle."Measures should be taken to let the buyers benefit from the growth of the industry instead of being subjected to such unscrupulous mentioned above.