Auto dealers fear further decline in sales

The auto-sector players feared 5-percent decline in the overall sales of automobiles for January-2019 to 22,448 units due to non-issuance of notification regarding withdrawal of restriction imposed on non-filers for purchase of new vehicles.
Talking to the Business Recorder, former president Lahore Chamber of Commerce and Industry Malik Tahir Javaid pointed out that 15 percent contraction in also expected in the unit sales of total passenger car and light commercial vehicle (LCV). He said a decline of 40 percent in sales in recent months has already been observed due to curb on purchase of new vehicle by non-filers. He said things were getting alarming as the federal government has so far not issued any notification regarding abolition of restriction imposed on non-filers for the purchase of new vehicles.
Since the announcement of lifting ban on purchasing of vehicles from non-filers, the car dealers have been receiving immense number of queries for booking or cash purchase of vehicles on daily basis, he said, adding that growth or margins of automobile sector are casting uncertainty for the demand of price elastic variants.
He feared that long-term Auto Policy 2016-2021 is in place, however, the coming year posing key risks to our outlook include (i) steeper drop in economic growth, (ii) adverse change in duty on imported CKDs, (iii) sharp increase in steel prices, and (iv) further unexpected volatility in exchange rate.
He said mindful of the headwinds in term of currency risks, rising interest rates and new competition flagged would be shoving the auto sector towards dead-end. He said strong demand from ride-hailing services and auto-financing kept volumetric growth on the high side for automobile assemblers.
However, earning performance remained low as rising input costs and compressing margins, limited earnings to a 4 percent growth rate, which was 29 percent last year, he maintained.
"Because of non-issuance of notification regarding withdrawal of restriction on non-filers for purchasing of locally manufactured motor vehicles up to 1300CC, we are not only refusing to process non-filers' booking requisites but also not selling vehicles to non-filers on cash payments," he added.
The government through Finance Supplementary (Second Amendment Bill) 2019 proposed Clause 4(8) amendment to section 227C to relax restriction on non-filers for purchase of locally manufactured motor vehicles up to 1300CC. Through this amendment, the restriction on purchase of locally manufactured motor vehicles above 1300 cc was proposed to be abolished for non-filers.
He said the amendment proposed during the announcement of the reform package by the Federal Finance Minister on January 23, 2019 was widely appreciated by the stakeholders, who had been of the view that this decision to support local industry lifting the ban on purchasing of vehicles from non filers would not only get more revenue but would support allied and vending industry.