Japanese Used Cars Pakistan

The import of used automobiles has considerably declined in the first quarter. Market sources say the downtrend is due to uncertain policies, a glut of imported used automobiles and a saturated auto market.

“The number of imported used and reconditioned cars declined to 9,000 in the first quarter of 2006-07 against 15,000 in the corresponding period last year,” an official said.

The government wanted to continue imports of used cars as the gap in demand and supply in auto sector has yet to be bridged, he said.

According to a market survey, used vehicle importers are suffering huge losses due to low demand coupled with and excess in supply.

Some used cars’ importers have suffered with funds getting blocked, market sources said.

Dealer Shafqat Rasool claimed a local importer had imported 400 used cars. “He now, however, is facing a problem in selling the vehicles.”

Rasool expressed hope that the situation would get better in next few months. The huge import of used cars has not affected demand for locally manufactured automobiles.

Meanwhile, a senior Ministry of Industries official said permission for imports of used cars had been given because of the inconvenience caused to new automobile buyers.

“Because of prolonged waiting periods and illegal premiums on new automobiles, people were suffering. In a bid to bridge the gap in demand and supply, the government has allowed the import of used cars,” he said.

He, however, admitted that imported cars were not up to mark and a restriction had to be imposed on import of cars more than five years old. “The condition was imposed with a view to maintaining the quality of imported cars,” he said.

The increase in profits can be taken as a strong indicator about market appetite in auto sector in Pakistan.

For example, earnings of Honda Atlas Cars’, a leading auto player in Pakistan, for the year ended March 2006 posted massive upsurge. After tax profit for the company soared by 335% to Rs 705m compared to Rs 162m last year.

The exceptional growth in the bottom line primarily emanated on higher sales volume and increased margins.

Higher selling prices of Honda City cars and appreciation of the Pakistani Rupee against the Japanese Yen during the period also contributed positively. Sales revenue for FY06 surged by 55% to Rs 25,639 million while gross profit for the year stood at Rs 1,168 million, 312% hike as against Rs 283 million in FY2005.

Operating expenses of Honda Atlas increased by 43% to Rs 284 million due to upward adjustment in the entry-level salaries and additional advertising and promotional expenses on launch of New Honda City and Honda Accord.

On the other hand, 92% upsurge in the other operating income of the company boded favourably for the bottom line.

Honda Atlas has also declared 70% bonus shares for the year ended March 2006.

Honda Atlas Cars’ CKD sales stood at 31,401 units, portraying 57% increase over 20,004 units during the same period last year. Honda Civic’s sales stood at 13,417 units while 17,984 units of Honda City were sold during the year.

Sales revenue of the company soared by 55% to Rs 25,639 million in FY06 compared to Rs 16,587 million previously. It includes Rs 1,119 million from trading business. The company has also entered into the CBU business by launching Honda Accord. The new car is targeted to the high-end segment of the market.

Pakistan is now one of three countries in the world with more than one million NGVs in their fleets, behind Brazil with 1,117,885 and Argentina with 1,459,236, according to statistics from the International Association of Natural Gas Vehicles.

The country has been making an all-out push on switching over to CNG as a fuel and thus reduce oil imports.

Vehicle conversions to CNG are clipping along at the rate of more than 40,000 per month, according to the Hydrocarbon Development Institute. The country now has 930 CNG stations operational with another 200 under construction.

According to the US Energy Information Administration, Pakistan currently is producing about 64,000 barrels per day of its own oil, while in 2005 it consumed an estimated 351,400 barrels per day.

By contrast, Pakistan has an estimated 26.83 trillion cubic feet (Tcf) of proven natural gas reserves, and is essentially self-sufficient for the moment with that fuel. The country has estimated reserves of 26.83 trillion cubic feet (Tcf), and produced and consumed 0.84 Tcf in 2003.

Sales of locally assembled cars registered 15 per cent growth during September 2006 compared to the same month last year on the back of increased production and demand, official data said on Tuesday.

Latest figures compiled by the Pakistan Automotive Manufacturers Association (PAMA) reveal a total of 13,354 cars were sold during September 2006, which shows more than eight per cent decline in sales compared to August 2006. In August, 14,566 cars made their way into the market.

“There is a decline in growth rate of local car sales, which can be attributed to higher imports of second hand or used cars,” said Faisal Shaji, Head of Research at Capital One Equities.

“These imported cars are being brought into the country by a particular class, affecting sales of locally assembled products to some extent.”

However, he said, the decline in sales’ growth had not made a dent in local assemblers’ shares in a big way, as prices of their cars did not witness any significant decline during 2005-06.

Local assemblers last year witnessed sharp growth in their sales as a total of 155,514 cars were sold during July 2005 to June 2006, which stood 22.15 per cent higher compared to 2004-05.

However, consumers’ passion for new cars appears volatile this fiscal, as sales growth of locally assembled cars remained comparatively lower during the first quarter of current financial year.

Among other auto products, production of locally assembled trucks witnessed an increase of 54 units to 417 in September 2006 compared to 363 in August 2006. However, their sales fell slightly by four pieces to 332 from 336.

Production of buses remained higher during September 2006, touching 506 units compared to 444 produced in August 2006. However, they registered decline in sales at 424 units compared to 428 sold in August 2006.

Sales of light commercial vehicles registered a sharp jump, reaching 172 units compared to 76 sold in August 2006. However, production remained lower during September 2006 and touched 60 units against 120 produced in August 2006.

A total of 2,787 pick-ups were sold in September 2006 compared to 2,719 in August while downward trend was witnessed in farm tractors’ sales, which declined to 3,833 compared to 4,119.

Both production and sales of locally assembled motorcycles witnessed a sharp jump during September 2006 as 39,566 bikes were sold compared to 35,734 sold in August 2006. Source: The News

Islamabad – A new import policy which was presented in October 2006 is good news Pakistani nationals living abroad.

The revision allows for the import of three year old used cars as opposed to the current two year old vehicle restruction. Also, the importation regulations have been simplified to allow easier processing of imports.

The amendments are:
(i) Under the gift and personal baggage schemes, vehicles up to three years old will now be importable.

(ii) Under the gift scheme brothers and sisters will also be eligible, besides the parents, husband, wife and children.

(iii) It will no longer be required that the vehicle be registered in the name of the Pakistani national prior to its import under the personal baggage or transfer of residence scheme.

(iv) Overseas Pakistanis holding Pakistan origin card will also be eligible to import vehicles under the gift, personal baggage and transfer of residence scheme.

(v) Right and Left hand drive vehicles are now eligable for import to Pakistan.

The policy change also tackles the many types of malpractice, manipulations and exploitation of consumers that has been going on for years.

The Pakistanki automobile industry was on the offensive about the changes. The PAMA (Pakistan Automotive Manufacturers Association) and the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM)said that it would be a massive setback for the country’s native manufacturing plants.

“Relaxing the import regime for vehicles would prove a setback to the local car makers as well as local vendors,” says PAMA chairman Kunwar Idris. He also mentioned that about 135,000 people involved in the industry.

Meanwhile the chief of the PAAPAM, Mehdi Ali Rizvi, said that the supply side of the automotive industry would decrease and that he and other investors are considering plans to halt investment.

The Government replied by dismissing the allegations against the rule changes. Commerce minister Humayun Akhat Khan said all the government did was to change the procedures to give relief to middle income earners who could now get cars at affordable prices.

Under the rules for foreign resident Pakistanis, imports of used and new cars are permitted on transfer of residence, gift to immediate relatives and for stay abroad extending beyond six months. The new rules simplify these processes and tackle malpractices and loopholes in the laws.

Since left-hand drive system is in vogue in most parts of the world as against right hand in Pakistan, the ownership restriction has been dropped to facilitate import of right hand drive cars from whatever sources these are available.

In left hand drive Duabi, exporters resorted to forged documents to get around the right hand drive only rules. Also, as many of the cars are leased for three years after which they are sold, it has been decided to extend the limit to three years.

The reasons for the relaxations of the rules are clear. At present there is about a 30-40,000 gap in the supply of new cars in Pakistan which leads to inflated prices and a long time to wait for delivery. These changes would ease the burden on consumers.

Used car dealers anticipate arrivals of 30,000-35,000 used cars in the current fiscal year.

The government, prior to the new measures taken in the Trade Policy 2005-06, increased the depreciation allowance on used car imports to two from one per cent in the budget 2005-06. This was designed to bridge the demand and supply gap of about 40,000 cars, which the local industry has failed to meet despite doubling production capacities.