By Nauman Tasleem
LAHORE: The prices of used vehicles have increased by 15 to 25 percent because of rapid increase in prices of new cars, a survey conducted by Daily Times found on Tuesday.
According to Pakistan Automobile Manufacturers Association (PAMA), around 164,710 vehicles were produced in 2007-08 and currently around 511,213 three-year-old vehicles are running in the country.
Pakistani auto industry has seen a boom in the last five years due to low mark-ups and relaxation in lease terms. However, with an increase in mark-up rates and tightening consumer-based finance has resulted in decrease in sales of new cars through lease.
The share of auto sector in Pakistan’s GDP is 2.8 percent while its share in the manufacturing sector is 16 per cent. The industry job multiplier is between 1: 3 to 1:8.
With unprecedented growth in automobile sector starting FY02, a robust annual growth rate of almost 35 percent has also taken place in the vendor industries during the last five years. This robust growth was contributed both by the original equipment manufacturers (OEMs) as well as vendors who made a heavy investment of approximately US$ 2 billion during the last three years. The recent slump in auto sales has also hit the vending industry. Recently, automobile manufacturers and auto-parts’ vendors have warned the government that the revenues from automobile sector would decline by over 25 per cent this year due to declining demand. Encouraged by the automobile growth from 2001-2007, the industry and the government of Pakistan fixed a target of over half million units’ production by the year 2011-12 that now seems out of reach. The manufacturers regretted that the industry has failed to achieve the targeted productions in 2006-07 when 1,95,688 cars were manufactured against a target of 2,26,620 units.
“The cars manufacturers have increased the prices of new cars owing to depreciation of Pak rupee,” said a car dealer Muhammad Rizwan Goraya. “The tightening of the vehicle leasing policy and the higher mark-up are the factors that are forcing the buyers to go for second hand vehicles,” he added. He said that the small used cars are more in demand than luxurious cars and therefore their price has increased much more. “The five years and less old vehicles are more in demand and maximum price increase have been seen in this segment, while there is a minor difference in the prices of cars more than six or eight years old,” Goraya informed. The 800 CC cars are always in demand and a major hike is in seen in the price of these vehicles.
Jail Road Traders Association, General Secretary Zafer Iqbal said that the car manufacturers have increased the prices of new cars owing to depreciation of rupee. “This has created problems for people who want to buy second hand cars, as its prices have increased by around Rs 25,000 to 35,000.”