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Fahad Ahmed, a businessman, wanted to buy a new vehicle, and instantly faced two options – pay ‘own-money’ for prompt possession or wait four months.

He chose to go the route officially advised by most auto-sector companies.

A few months later, Ahmed rued his luck as the delivery time stretched beyond 180 days, but the ordeal was not over.

He ended up paying a higher amount because the vehicle’s price increased — in fact, he ended up paying more than what he would have as ‘own money’.

Automart: car prices in Karachi

Customers shopping in Pakistan’s auto sector are often faced with such a situation.

Amid massive rupee-volatility, car prices inevitably remain under pressure. Due to lack of localisation to the extent government wanted, car prices remain subject to the exchange-rate, swinging wildly upwards if rupee starts to depreciate.

Ahmed’s situation also brings to light another issue — delivery times.

Back in 2016, when the then-government introduced the auto policy, its reasoning for offering new players incentives was to increase competition, make a wider array of choices available to the consumer, and reduce lead time.

Fast-forward to 2022, delivery times are nowhere near where desired.

Business Recorder looks at the various car brands, and the unofficial delivery times being quoted to customers in Karachi.

KIA

A dealer at KIA confirmed to Business Recorder that there is a 10-month delivery time being quoted for its Picanto variant in Karachi. Its booking has remained suspended for a few months.

Auto sales to increase in May, but a slowdown is right around the corner in Pakistan

KIA’s crossover SUV Sportage has a six-month delivery lag, while mini-SUV Stonic and mid-size SUV Sorento are readily present, the salesperson added.

Honda Atlas

A sales manager at Honda Cars dealership said delivery time for its high-end Civic is presently at 10 months. City’s 1.2 and City 1.5 Aspire (automatic) are expected to be delivered after four months, while City’s 1.5 standard variant and BR-V’s delivery period is one month.

The salesperson said that Civic’s prompt delivery costs (read own-money) Rs600,000 while for the City the amount stands at Rs150,000.

Honda Atlas increases car prices, delivery time for higher-end Civic stays at nearly 12 months

Pak Suzuki

Research analyst at Ismail Iqbal Securities Muqeet Naeem, who covers the auto sector, said car buyers were also facing delays with Suzuki. Alto variants’ delivery periods have increased to six months, while Wagon R has a three-month delivery lag.

There is also a three-month delivery period for Cultus variants, but it has been suspended for the last 10 days, according to a Suzuki dealership.

Around Rs150,000 to Rs200,000 own-money is being charged on Suzuki hatchbacks.

After Toyota and Honda, Pak Suzuki hikes car prices by as much as Rs129,000

Toyota (Indus Motor Company)

A car dealer said own-money of Rs600,000 existed for Toyota Corolla vehicles, especially Grande.

Delivery period for the car is at nearly eight months. Toyota Yaris takes up to three months to be delivered and own-money is being charged up to Rs300,000.

Changan

A company official said that its SUV Oshan X7’s delivery time is at seven months. Alsvin Lumiere is available with a lag of one month, while its manual edition would be delivered in September — a three-month lag.

Hyundai

Meanwhile, information gathered from dealerships in Karachi suggests Hyundai Tucson’s delivery time is at three months. A few weeks ago, its delivery time was at one month.

Hyundai Elantra variants' delivery time is also now at three months.

Sonata 2.5L delivery period is at one month, while the 2.0L variant is slated for delivery after two months.

Naeem said the market is expecting delivery periods to reduce after the State Bank of Pakistan (SBP) introduced demand-curbing restrictions on auto financing. Increasing car prices due to rupee depreciation will also add towards reducing demand.

How OEMs are looking to curb the own-money issue

Indus Motor Company (IMC) CEO Ali Asghar Jamali says the government’s restriction to collect a maximum of 20% on booking makes a business case for investors.

Overall auto market to contract 10-15% as car prices come under pressure: Indus Motor CEO

Investors can book five cars at a price of one, which chokes supply and increases delivery time, giving margin to investors to charge high own-money, he said.

Jamali says if car companies are allowed to charge full payment at the time of booking it would make the industry unattractive for investors.

Government can then penalise assemblers if they do not deliver a car in three months.

Another official said present-day circumstances – wildly fluctuating exchange rates and international commodity prices – would continue to keep ‘investors’ relevant.

The official said investors would still be booking cars at full price anticipating a price increase.

“However, if the government allows companies to take full payment, with the added clause of charging higher prices if rates increase, then investors will be eliminated,” the official added.

Comments

Comments are closed.

Adal Baig Jun 08, 2022 09:57am
No one is focusing on the capacity utilisation of these auto assemblers. If they are not using their 100% capacity for fear of overheads disturbing their gross profit margins then how can they talk about the delivery woes of customers. No doubt the investor mafia is a pain in everybody's neck but there are other ways to counter this menace. Why cant FBR scrutinise the sales data of every assembler and identify the dubplicate CNICs in a six month period to start with. this is just one way. If only one has the will things can be controlled but for that a strong regulator needs to be in place. Sigh!
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Khadim Jun 08, 2022 09:21pm
1- Bring back the the filer requirement. 2- Restrict 1 can per year on one CNiC 3- increase advance income tax to by 5-10 % on low-high value vehicles. 4- prohibit transferring the vehicle before registration. If they really want to curb the own-monies thereby reducing the delivery times, I am sure they can find many ways. Also I find the argument from Mr. Jamali, a bit ridiculous. Getting 20% but being able to pass on the price increase with these upto 10 months delivery periods is like a perfect match for auto makers. Only worry for them would be demand suppression but I am sure that net profits won't have an impact as such..
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Rizwan T Jun 09, 2022 01:05pm
Auto manufacturers are themselves in collusion with the 'own' mafia. They book tens of cars on a single CNIC, provide deliveries on 'open letter' without invoices to facilitate 'own money' sales. And the CEO of Toyota Atlas is asking to charge full payment for a delivery time of 4 months!
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Usman Ansari Jun 09, 2022 09:58pm
It’s clear that the auto assemblers are working with speculators (I.e. what they refer to as investors in this article). The economic system of Pakistan is broken, and these industries are all here to continue looting the common man. This is why I would rather buy a smaller imported car for the same cost as a larger locally assembled vehicle. I don’t want to feed this monster.
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