KARACHI, Dec 15: Car assemblers and vendors alarmed over negative growth in sales have expressed the hope that the sales and production will be recovering from the current slowdown by March or April next after setting up of new government ending the prevailing political turmoil.

They observe that political uncertainty for the last few months has been creating negative sentiments among prospective car buyers and there has been a slowdown. They however did not give actual sales and production figures for December.

Other factors which have driven the auto industry into state of turmoil, they cited increase in car prices after imposition of capital value tax (CVT), the rising cost of car financing, curtailment of auto financing by some banks, piling up unsold stocks of imported used car and rising rate of defaults on payment of car leasing and financing.

December has always been slow month in terms of sales as buyers of locally-assembled cars usually stop booking or spot purchasing until January because of change in model year. But assemblers and vendors who wished not to be named attributed this slowdown to other factors.

Some Japanese car assemblers have rescheduled their production plans for November and December and cut down their parts and accessories procurement by 50 per cent from the local vendors in view of crisis-like situation after the imposition of emergency.

A vendor, on condition of anonymity, said that assemblers had also curtailed the procurement order for importing completely knocked down (CKD) kits from their parent companies. He said that the assemblers had not yet informed vendors about procurement plans of parts for January next.

Even after the lifting of emergency on Saturday assemblers and vendors were not very optimistic about sudden revival in consumers’ buying sentiments.

“I think the local car industry will be back on track by end of March or start of April when consumers will resume buying activities depending on the smooth elections and formation of new government,” he said.

He added that a larger stock of unsold imported used cars available at highly competitive prices had turned some locally-produced cars less attractive.

However, the import of used cars fell to 35,721 units in 2006-07 from 54,618 units in 2005-06 following restriction on the age of import of used cars to five years in 2006-07. In 2007-08, the age of second-hand vehicles has further been reduced to three years.

At a time when assemblers reveal slowdown in car production, the Engineering Development Board (EDB) had already issued instructions to the Pakistan Automotive Manufacturers Association (PAMA) in October this year to include Suzuki Bolan Van (previously included in the category of light commercial vehicles for over a decade) in the category of car segment.

The EDB has not come up with any official version as to why it has taken this decision.

Even PAMA had changed the figures of sales and production in its historical data available on its official website back from 1995-1996, thus changing the car scenario entirely.

Analysts and even some assemblers are highly surprised over this change by the EDB. Many think that inclusion of Bolan in car list was aimed at improving sales and production figures which had been showing negative growth. A year back car sales and production statistics used to give 15-20 per cent growth.

In absence of any official announcement from the EDB, it is hard to ascertain the exact production and sales figures. However, according to PAMA figures, if Bolan is added then the overall car production (from 800-2,000cc) for July-November 2007 jacks up to 74,578 units as compared with 70,844 in the same period of 2006.

Sales stood at 70,345 units during the period under review as compared with 70,395 units the same period last year. The contribution of Bolan in terms of production and sales during July-November 2007 is 7,585 and 7,530 units while in the same period of 2006, it was 5,423 and 5,399 units respectively.

If Bolan is excluded from the current figures, then the overall car sales for July-November 2007 fell to 62,815 units as compared with 64,996 units in the same period of 2006. Likewise, production during July-November 2007 declined to 66,993 units as compared with 65,421 units in the same period of 2006.