The government decision to import three years old cars, instead of five years old, has not only led to an upsurge in premium of local cars but has also put on stake Rs 12 billion of dealers as between 3000 to 3500 vehicles are stuck up at Japanese ports, said H M Shahzad, Chairman, All Pakistan Motors Dealers Association (APMDA).
Talking to Business Recorder, he said that contrary to previous years' practice, the government did not consult them before budget and its abrupt policy change has not allowed the local dealers to clear their position.
These vehicles, he said, are held up at Osaka, Tokyo and Yokohama ports of Japan, whereas two ships had arrived at Karachi ports before June 30, the last date of allowing five years old cars. Previously, he said, the association used to be taken into confidence before taking any budgetary measure, but this year it was completely ignored, and left high and dry.
It was the government, he said, that had encouraged them for import of used cars two years back, saying that it wanted to break the monopoly of local assemblers selling cars in black marketing.
"We were not taken into confidence. Thus local importers could not inform their exporters before hand about government decision in Japan, Dubai and London," he said, adding that last year they were informed two month before the budget about reduction in the age limit of used cars to five years and the Association was able to intimate to its suppliers in time.
"It seems," he said, "that the government decision would head it back to 2004 situation when automobile industry was charging a premium of its own choice and one had to wait for six months to have a car". Giving details, he said that the premium of all cars was increased manifold from the day after the budget. Premium on Corolla XLI GLI was raised to 75,000 on June 11 from Rs 7, 000 on June 8, he added.
Similarly, he said, the premium of Suzuki Mehran was increased to Rs 30,000, Alto Rs 35,000, Cultus Rs 40,000, Ravi pickup Rs 75,000, Suzuki Bolan Highroof Rs 85,000, Potohar Jeep Rs 1,50,000, and Honda Civic Rs 1,30,000.
He said that the local car assemblers had increased the premium immediately after the government announced to allow import of three years old cars instead of five years.
About import of used cars, he said that in 2005-06 as many as 60,000 used cars were imported. In 2006-07, the number of cars were reduced to 26,000; this year it is unlikely to be more than 10,000 because the current situation.
Shariq Sohail of Rubatech and Pakistan Autoparts Manufacturers Association said that it were the dealers who were charging premium, and not the assemblers. The issue was taken up with the assemblers on numerous occasions, and they were asked to do something about the dealers charging huge premium from customers.
He blamed government's inconsistent policies being responsible for the present situation, saying that the government, instead of allowing import of used cars, should have given incentive-based production targets to assemblers. If they failed to meet the target aimed at bridging the demand-supply gap, the government should allow import of used cars.
He, however, did not have specific answer to why the premiums had gone up the very next day of the budget. All he said was that it was the middlemen, dealer, that was making money by charging premium.