NEW POLICY NEEDED FOR LIGHT DUTY TRUCK INDUSTRY

Unfortunately, one assembly unit of light duty truck is shut down while the sales volume of other two assembly units has been decreased by more than 50%.

ANWAR IQBAL, CEO Silver Seal International
Mar 19 - 25, 2007

The influx of used vehicles in the last one-and-a-half years is still hurting local industry in terms of sales, as people are still fascinated over the huge stock of used vehicles parked in showrooms and even on roadsides. However, there has been a decline in the import of used cars due to expensive spare parts and poor engine know-how of local mechanics.

In case of light duty trucks the situation is different and customers still prefer used Japanese light duty trucks. Presently used Mazda truck of 3.7 and 2.6 liter engine is the most popular truck among the customers.

Till late eighties Mazda light duty truck was assembled in Pakistan so the spare parts are easily available in local market on cheaper rates. On the other hand since it is the model of 70's so technology is old and simple therefore local roadside mechanics understands its engine and other technicalities very well. It means it is easy to maintain. The engine is of Japanese technology so it also have technical edge on Chinese trucks same class.

Regretting to say that in some areas government policies are always confusing and conflicting, the same situation is in the case of light duty truck policy. The first truck industry policy of the country is aimed at modernizing trucks fleet. Government is thinking to cancel the registration and route permits of old Bedford trucks which are still in majority on Pakistani roads and highways. On the contrary they have allowed the import of old light duty trucks. These trucks are not only coming from regular importing channels but also coming through smuggling. Due to corrupt and defective system of the registration of commercial vehicles, transport mafia can get registration of smuggled trucks through the manipulation of registration records.

Pakistan's first truck industry policy is focused on heavy-duty trucks. No doubt heavy-duty trucks have a major role in the economy but light duty trucks segment plays a basic role. Light duty trucks are intercity freighters. They are used for deliveries of vegetables and fruits from farms to cities. They are also used for carrying passengers in countryside and in small towns. It means it is a multipurpose transportation mode at grassroots level and directly related with the increase /decrease of cost of daily use items.

Unfortunately due to wrong government policy, one assembly unit of light duty truck is shut down and the sales volume of other two assembly units has been decreased by more than 50%.

One more factor which is hurting this sector is high interest rates for leasing and higher percentage of down payments / advance money. Light duty trucks are not for individual use like cars. It is a contributor in national economy so a separate and easy leasing facilities / policy should be adopt by banks.

In the light of present circumstances we hope that the government would take corrective measure immediately.

NET COLLECTION OF GST IMPORTS (Rs. Million)

 

JULY-DECEMBER

SHARE (%)

 

2006-07

2005-06

Growth (%)

2006-07

2005-06

Auto Parts

1,287

1,059

21.5

2.1

2.0

Net collection on GST import for 1H06-07 stands at Rs 1,287 mn, a significant increase by 21.5% as compared to same period last year i.e. 1H05-06 Rs 1059 mn.

NET COLLECTION OF SALES TAX IMPORTS (Rs. Million)

COMMODITIES

FY: 06-07

FY: 05-06

GROWTH (%)

SHARE (%)

 

Vehicles and auto parts

7090

8228

-13.8

8.3

 

Net collection of Sales Tax import for 1H06-07 stands at Rs 7090 mn, showing a decline by 13.8% compared to same period last year i.e. 1H05-06 Rs 8228 mn.

ADVANCE TAX PAID H1: FY: 06-07
(Rs. Billion)

SECTOR

AMOUNT Q2

SHARE (%)

AMOUNT H1

SHARE (%)

 

Automobiles

0.50

1.32

1.47

2.5

 

Contribution of Auto Sector as a Revenue Spinner in Indirect Taxes

 

INDIRECT TAXES (RS. BILLION)

SHARE IN GROSS (%)

 

FY: 05-06

FY: 04-05

Growth (%)

FY: 05-06

FY: 04-05

Auto Sector

63.1

41.5

51.8

11.7

8.7

Contribution of auto sector in direct taxes for FY: 05-06 Rs 63.1 bn, showing a considerable increase of Rs 22 bn or growth of 51.8% as compared to last year i.e. FY: 04-05 Rs 41.5 bn.

Source: CBR