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All Pakistan Motor Dealers Association (APMDA) Chairman H.M Shahzad speaks to Daily Times’ Senior Business Reporter Arshad Hussain on the government’s policy for the auto sector, foreign investment and Pakistan’s chances for exporting cars.

Daily Times: What changes in the government’s policy do you foresee in the auto sector in the forthcoming budget?

H M Shahzad: The government will have to give a clear-cut auto policy in the forthcoming budget in May 2007 to counter the rising demand of the passenger vehicles, as the local manufacturers and assemblers are not able to meet this demand.

The federal government has recently approved a five-year auto policy for the local assemblers and manufacturers, as well as the new foreign investors coming to Pakistan.

The government should also make some changes in the import policy for the dealers, as they are filling the demand and supply gap.

The main problems of the auto sector are demand and supply, black marketing - as every car is being sold on on-money – and 100 percent payment at the time of booking.

Because of the import allowed by the government in 2004, the local assemblers and manufacturers are facing a healthy competition and as a result of this competition, on-money and black-marketing of brand new cars have reduced in the last two years.

The on-money on most of the vehicles including Toyota and others has been suspended.

DT: Can the local manufactures meet the demand for cars and will the government ban imported cars?

HMS: The local assemblers and manufacturers are unable to meet the rising demand, which is moving up by 22 to 25 percent per year. The local auto companies cannot even fill the backlog of the previous years then how can they fill the rising 22-25 percent demand.

In my view, the imported cars would not be banned, as it is necessary for the government to import vehicles to fill the gap as in the case of sugar, cement and products in demand.

And if the government does ban imported vehicles, the same situation would be created as in 2003 and 2004, when customers were getting delivery of their cars after a year despite making full payment.

I am reading statements by the auto industry in different newspapers, in which they are offering delivery period of the cars in one and half month, but contrary to this, Suzuki is delivering cars in five to six months, while Honda City and Honda Civic is being delivered in a four to five-month period. READ MORE…