KARACHI: Premium on Honda CG125 has gone up by Rs3,000 as dealers are selling the bike for as high as Rs119,000.

The bike is on display at some showrooms on Akbar Road, Karachi, but dealers say they are not for on-spot sales and have already been booked. But if any impatient buyer insists on quick delivery, he will get the bike at a price of Rs117,000-119,000 depending on black and red colour, respectively.

The company’s original price is Rs105,500, exclusive of Rs4,000 for lifetime tax and registration. In October, Honda CG125 was selling for Rs114,000-116,000 (including the premium).

Moreover, the normal delivery time after the booking ranges from 15 days to one month for the black colour and one month to 40 days for the red colour.

“Low supplies from the plant are not matching up with the huge demand,” a dealer said, adding that the model had been in hot demand for almost two years.

In October 2016, CD70 was also available at a premium of Rs4,000-5,000 but now it is easily available on-spot sale at the company’s price due to improved supply from the company. Other models of Honda are also easily available on-spot delivery.

Some cars and Chinese bikes are also selling above official prices

It is not clear whether the dealers are minting money by artificially creating demand and supply gap to cash soaring demand. Sources said Atlas Honda Ltd (AHL), which has already increased its production capacity, has not taken any serious action against dealers charging premium.

The company has increased the production capacity to 1.35 million units a year from 750,000 units with the timely completion of the second production line at its Sheikhupura plant.

The AHL raised the price of Honda CG125 by Rs500 in October while keeping the prices of other models unchanged.

The overall sales of Honda bikes swelled to 626,040 units in July-February 2016-17 from 532,183 units in the same period a year earlier. The company sold 811,034 units in 2015-16 as compared to 653,193 units in 2014-15. In January, production and sales touched record 86,100 and 86,074 units, respectively.

In its quarterly report for October-December, AHL said demand for consumers durable increased in rural areas as the agriculture sector posted robust growth due to better water flow, subsidy on fertilisers and better yields of the kharif crops. Livestock, fishing and forestry also showed progress.

Meanwhile, some hot-selling Chinese bikes have also become costlier, while delivery time of Honda City car has gone up to September from May to August a few days back.

Assemblers of Chinese bikes have increased prices by Rs700-1,000 a bike amid rising demand. The companies attributed price hike to higher input cost due to rise in steel, plastic and rubber prices on the world market and impact of the exchange rate.

Chairman of the Association of Pakistan Motorcycle Assemblers Mohammad Sabir Sheikh said that due to late delivery and premium, customers were buying 125cc Chinese bikes which had almost the same design as that of Honda CG125 and were easily available on instalment.

Amid late delivery of locally assembled cars to three to six months coupled with premiums ranging between Rs40,000 to Rs250,000 depending on the model, authorised dealers said all assemblers were operating at full capacity.

Iqbal Shah, chairman of Pakistan Automobile Assemblers Dealer Association, said lead times on vehicle delivery arose on high demand and were a common phenomenon across the globe. Consumers in India waited for almost six months on certain Suzuki model, he claimed.

He said additional registration tax in case of transfer of new car within three months of purchase would help curb the menace of premiums.

The industry has taken various steps towards discouraging premiums, such as refusing multiple bookings of vehicles on a single national identity card, displaying vehicle availability information at showrooms and on the company’s website, he said.

He asked customers to book their vehicles only from authorised dealers and wait for the delivery of their vehicles.

Published in Dawn, March 19th, 2017