Auto imports decline marginally

The import of motor vehicles declined marginally by 0.88 percent in May amounting to $114.832 million, which took total July-May 2006-07 imports to $1.275 billion. In April, imports amounted to $115.855 million.
"This nominal decline in imports is just the beginning. If we observe the statistics, the CBU imports are down by over 17 percent. It is because of the reduction in capping from five to three years for import of used/reconditioned cars. The coming months would have a drastic effect on imports," said an importer.
According to data issued by Federal Bureau of Statistics (FBS), as the import of 'Completely Built-up Units' (CBUs) plunged by over 17 percent to $38.651 million in May 2007 as compared to $46.817 million in April, while imports of completely built-up units, which include both new and used vehicles, were down by 43 percent against $67.832 million of May 2006.
Diminishing interest of buyers in imported cars had been observed in the past few months because of low resale value, problems in the availability of spare parts and rising rates of interest on leasing. However, the buyers have started to opt for imported and reconditioned cars as spare parts are now being made available in the market.
Availability of spare parts, stable resale value, and declining quality of locally assembled cars had lured the buyers towards imported reconditioned and used cars, and influx of such cars had increased providing the buyers with choices.
The lowering of capping from five to three years would leave the imported cars non-competitive against locally assembled cars. It may be mentioned here that premiums on all locally assembled cars have shot up, while one leading assembler has also raised the prices of its brands.
The CBU import bill for the period under review includes units of trucks and buses, motorcars and motorcycles contributing $10.087 million, $27.756 million and $0.808million respectively.
CKD/SKD imports during May went down nominally by 2 percent, reaching $54.392 million against $55.514 million in April 2007. Under the parts and accessories head, imports during May were up by 69 percent on MoM basis to reach $17.586 million as compared to $10.411 million. This steep decline in the imports of parts and accessories may be attributed to over-trading in previous months.