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Pakistan Government may relax age-limit for used cars

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By Hina Mahgul Rind

KARACHI: Government is likely to relax the age-limit for the used imported cars from three years to five years, trade sources told The News on Saturday.

“The age relaxation might be announced next week,” a leading automobile importer and dealer said preferring not to be named.

The government imposed a ban on import of used cars aged more than three years in 2007/08.

Relaxing age limit and depreciation allowance for imported cars has been a major concern for the local automobile assemblers fearing competition and loss of a captive market, he said.

“The auto assemblers have been constantly perusing the government to ban the import of used cars and not to enhance the depreciation allowance,” he said. The government is taking the decision in lieu of the continuous price hike by the local assembler, he said.

The current government has been asking the manufacturers to reduce the prices of locally assembled vehicles the local auto sector has been arguing that the price increase was due to rise in input cost and depreciation of rupee against yen and dollar.

Reduction in the depreciation allowance from two percent to one percent has also proved to be beneficial for the local auto sector.

Sources said that the Ministry of Industries and Production has proposed to increase age limit of used cars to 5 years from current level of 3 years in the budget but it was withdrawn at the last moment.

After the Budget 2010/11 the ‘premium’ all locally manufactured cars has increased. Premium is the amount automobile dealers charge for immediate delivery of the vehicle, otherwise the buyers have to pay the car’s price and wait for few months for its delivery, a dealer explained.

The previous government had accepted all the demands of local assemblers, like reducing permissible age of imported cars from five to three years, in a bid to end the own money menace. However, automakers failed to fulfil their end of deal, he said.

The problem of premium on various cars still prevails despite claims by local assemblers that production has been increased to ensure immediate delivery and to discourage premium.

Authorised dealers along with other showroom owners are charging premium on negotiable rates. A market survey conducted by The News found that authorised dealers were offering negotiable premium on early delivery.

Premium on Toyota Corolla ranges from Rs60,000 to Rs100,000 for various models and colours. Daihatsu Cuore’s premium is Rs25,000-Rs50,000. Premium on Honda Civic is Rs65,000-Rs125,000 depending upon its variants models and colours. Honda City premium is from Rs35,000-Rs55,000.

Premium on Suzuki Mehran is Rs20,000-45,000, Alto Rs20,000-Rs35,000, Cultus Rs25,000-65,000, Ravi Pickup Rs45,000-Rs65000, Bolan Rs65,000-Rs100,000 and Suzuki APV (imported) Rs200,000.

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