Used car sales in Pakistan up on higher prices of new cars

By Moonis Ahmed

KARACHI: In the wake of ever increasing prices of new cars, the sale of used cars has seen a substantial increase pushing their prices up by 10 to 15 percent, dealers told Daily Times on Monday.

“The used cars sales have almost increased by 20 to 25 percent during last six months,” market dealers informed. Because of high interest rates and strict financing conditions from the banks, a major decline in the sale of new cars was witnessed during 2008. On the contrary some leading carmakers have recently raised the prices of their vehicles despite decline in the sales during July-December.

A few years ago the dynamics of the auto-industry was different. “The car manufacturers were enjoying monopoly and used to charge premium for immediate delivery of their vehicles.” They were indirectly supported by banks and leasing companies, which offered easy loans to people to buy vehicles,” expert said.

But now the situation of the overall economy is gloomy and auto-industry is the most affected by this situation. The consumer financing is witnessing negative trend in its growth and due to high default ratio, banks have adopted strict rules for financing of consumer products.

The auto-industry is dependent mostly on imported parts from Japan, hence it is very sensitive to the fluctuation in the Rupee-yen exchange rate. “The increase in new car prices is quite surprising considering the fact that car sales have fallen during the first half of the current fiscal year,” an expert commented.

The new model of Toyota Corolla is going to be launched at the end of the current month and its price is Rs 1,269,000.

Car sales recorded dull numbers as they stood at 52,927 units for July-December 2008, showing a decline of 48 percent, recent numbers released by PAMA showed. The whole 2008 witnessed a major decline of 55 percent.

An industry official said that the rupee had been losing value against foreign currencies since mid of last year, increasing the import cost for the industry. He said that the industry had been bearing this increase without passing it on to the consumers till now. “Now it has become impossible to further bear the brunt of rise in input cost, hence the manufacturers have passed on the rise to consumers,” he said.

Till November 2008, the steel prices had stayed at very high in the international market also responsible for the surge in the vehicles prices.Daily Times, 21-Jan-09

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