KARACHI - In view of frequent price-hike in gas and petroleum products, the four wheelers' sales growth is likely to decline significantly during the FY09. In addition, the increase in prices due to the imposition of Withholding Tax, Federal Excise Duty and GST along with halt in auto financing facilities and rising interest rates on auto loans, charged by the commercial banks, the local cars and LCVs unit sales is expected to report negative growth of around 9 per cent in FY09. The local auto assemblers profit is also projected to remain under pressure owing to expected exchange rate depreciation and rising costs. Since most high valued components used in assembling vehicles being imported, declining rupee has significantly increased costs of local auto assemblers. The car dealer told The Nation on Thursday that the soaring PoL product prices badly affected their cars and Light Commercial Vehicles (LCVs) sales business and consumers were reluctant to buy any variant of new or used locally produced/imported car. The impact of increase in WHT, FED and GST directly passed on to the buyers. According to the new price list issued by the assemblers in line with the Budget 2008-09, cars prices swelled drastically ranging from Rs 30,000 to 0.4 million on various engine capacities in terms of different taxes levied on car sales, dealer said, adding that even if the current sky-rocketing trend in oil and gas prices get continued, consumers will be scared about the maintenance of their vehicles rather than to buy a new car. It is pertinent to mention here that since March 2008, the record three -times fuel adjustments had taken place. Currently, petrol is being sold at above Rs 86 per litre, and CNG is being available at Rs 47.25 respectively. Meanwhile, industry analysts are of the view that the fall in auto sales is expected due to inflationary pressures in the economy refraining people from purchasing luxury items. Moreover, government has imposed 5% FED and fixed rates of WHT on auto sales in Budget FY09, to discourage consumer spending on luxury items. Furthermore, rising interest rates have made auto financing expensive, which accounts for almost 60-70% of the total auto sales. Already in FY08, auto sales have depicted negative growth of 11% to 187k units compared to 204k units in FY07. Economist expects further rupee depreciation, on average exchange rate, of 13% in FY09 against the US$. This would substantially increase costs for CKD (Completely Knocked Down) kits for the local companies, negatively impacting their gross margins. Steel prices have been continuously rising in the international market as shown in the graph below. For our analysis, we have used CRU (Commodity Research Unit) Asia Steel Price Index which has crossed US$320 per ton. This sharp rise in steel prices has caused the cost of both imported and local components to rise, increasing purchase costs for local auto assembling companies. In future, steel prices are expected to remain high on account of huge demand in India, Middle East and Africa due to construction activities.  In the quarter ended Jun-08, Gross Margins (GM) of local assemblers including PSMC, IMC and HACL are expected to remain under pressure following the unabated rise in steel prices (22% QoQ) and depreciation of PKR against the Yen (7% QoQ) and Euro (10% QoQ). Consequently the car manufacturers increased their prices (4%-7% QoQ), which has aided in arresting the GM decline.