Car imports double reflecting sharp demand-supply gap

LAHORE: Import duty relaxation on automobiles has steered the number of imported cars to double as local assemblers importing themselves a significant number reflecting a sharp gap in demand and supply at the domestic market.

According to official sources in Pakistan Customs, the persistent gap in supply and demand has given significant boost to the import of new and used cars during the current fiscal year and the number of imported cars is increasing with every passing day.

According to the sources, the major import of new cars is being carried out by Dewan Motors who have re-launched the Mitsubishi brand cars in Pakistan.

Earlier Dewan had launched the BMW series in Pakistan for the first time. Nexus Automobiles has also launched the Cheverlet Optra (1600 cc) in addition to Cheverlet Classic (1000 cc) already being imported. Indus Motor Company has recently lunched the Toyota Camry, a best selling car in the US market and plan to launch more vehicles in the SUV segment. Pak Suzuki has also announced plans to launch imported models of Liana and Grand Vitara in coming months.

The latest entrant to the imported car market is Nissan, who have also reentered the Pakistani market with two models of passenger cars, Nissan Sunny and Nissan Cefiro and two models of SUV's, Nissan Petrol and Nissan XTrail.

On the other hand, the sources added that a large number of used cars are already landing in Pakistan. These cars are being imported through Gift scheme and Transfer of Residence scheme. Both schemes were originally designed for the benefit of the expatriate Pakistanis, but now are being used as commercial business by car dealers.

A comparison of auto imports of 2004-05 pre and post duty reduction reveals that there has been a manifold increase in volume of imports.

Auto industry estimates suggest at the current rate of car imports the number might surpass 40,000 mark of new and used ones by the end of 2005 as a reduction in import duties.

Sources in Pakistan Customs have revealed that only during the last month more than 5,000 vehicles of various engine capacities have landed at Karachi port and are awaiting customs clearance. The auto dealers association has pointed out that an increase in import of vehicles would abate the demand supply gap in the country.

The demand of automobiles in Pakistan has increased manifold in the last 3 to 4 years due to good macro economic management and availability of cheap auto financing. To keep up with this demand the main car manufacturers, i.e. Pak Suzuki Motor Company, Indus Motor Company, Honda Atlas Cars and Dewan Farooq Motors have embarked on an aggressive production enhancement strategy.

Reports from the local auto manufacturers are very encouraging as these are increasing their production and this year the industry is likely to produce more than 150,000 vehicles.

Production by Indus Motor Company, the manufacturer of Toyota vehicles in Pakistan, in the last 9 years has increased by more than 5 times. Production of Toyota Corolla, the market leader in this segment, has increased from 5,000 units in 96-97 to 21,000 units (projected) in 04-05. Presently the company is expanding its production capacity and plans to reach 55,000 units in 05-06. Honda Atlas has also increased its production capacity from around 15,000 units to 38,000 units in 04-05. Pak Suzuki has recently enhanced its production facilities from 50,000 units p.a. to 80,000 units p.a. Dewan Motors has also increased its production capacity to 16,000 units p.a. —Hamid Waleed

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