Karachi: Amid uncertain political and economic outlook, local assemblers have started suspending advance booking of vehicles, citing volatile exchange rates and other issues.
Speaking to Dawn on Thursday, CEO Lucky Motor Corporation (LMC) Asif Rizvi said that the company has closed advance bookings of Picanto, Sportage and Stonic from April 4 due to rising dollar value against rupee, global supply chain uncertainty of semiconductors. had done Customer dissatisfaction over the chip, rising interest rates and rising prices.
However, the auto industry is now further shocked by a 2.5 basis points increase in interest rate, which limits the share of auto financing from 35-40 pc of total car and SUV sales to 10-15 per cent through bank financing. Will give Months ago when interest rates were low, he predicted.
He said auto financing has already slowed down in the last few months due to the decisions of the State Bank of Pakistan (SBP) to curb the demand for autos.
Mr. Rizvi said that it was really difficult for the assembler to ask the customers to pay the balance payment on the bookings made at the previous rates. “The fear of further hike in prices after the steep spurt in car and SUV prices coupled with high interest rates forced many customers to cancel their advance bookings,” he added.
“If the new government controls the country, another kind of unrest prevails over the industry over new policies and decisions,” he said.
On Thursday, Indus Motor Company (IMC) suspended bookings for all its vehicles due to uncertainty and exchange rate.
Speaking to Dawn, CEO IMC Ali Asghar Jamali said that a few months back the share of auto financing on total car and SUV sales was 25-30 pc which will come down from 20 pc in the coming months.
“I see a bad scenario in which no one knows what will happen next in the midst of economic and political instability,” he said.
Despite massive price hikes, auto assemblers were holding off advance booking of vehicles, with delivery times ranging between two months and 11 months, resulting in “on the money” for spot purchases.
“I think the negative impact of the political and economic crises has finally started to take a toll on the auto sector, which is evident from the suspension of bookings by assemblers,” the CEO said.
Mr. Jamali said that in view of the rising prices of vehicles, many people had to cancel advance bookings.
In the last quarter of 2021, SBP tightened norms on auto financing to reduce demand in the auto sector. The maximum tenure of auto finance was reduced from seven years to five years. The aggregate auto financing limit received by an individual from all banks/DFIs, in aggregate, shall not exceed Rs.3 million at any point of time; And the minimum down payment for auto financing was increased from 15 pc to 30 pc.
Published in Dawn, April 8, 2022