LAHORE – The auto dealers are planning to move the court, lodging a petition to nullify the ECC decision of cut in age limit of used cars import, as they think that most of the imported vehicles constitute 1300cc and above, making up 55 per cent of total imported cars. Thus, putting import curbs across the board is therefore not justified, they believe.

Sources said that auto dealers will try to convince the court that allowing imports of 1000cc and below category vehicles should be the priority so that middle class could benefit.

Sources said that National Assembly Standing Committee on Finance has already expressed its reluctance on the issuance of the notification regarding the restriction imposed on the import of over three years old cars. The Committee had pointed out the aforesaid notification cannot be issued until it is vet by Ministry of Law.

Auto industry experts said that though auto assemblers cite vetting of the ECC’s import-related decision through Ministry of Law a normal course of action, importers are upbeat too on the possible reversal of such decision on account of their understanding with the government, including National Assembly as well as the Senate’s Standing Committees).

Vehicles traders and importers think that their stand is relatively stronger on the point that consumers may suffer from this decision due to least choices left along with possible loss of Rs14 billion, as estimated by the FBR for next 6 months, in terms of duties revenue given already lingering fiscal position of the government.

According to the data available for imported cars, only in FY12, around 55,000 cars were imported in the country. Segment-wise data reveals 54 per cent of total imports comprised 1300-1800cc category, which directly hit Indus Motors’ market share, keeping in mind that 80 per cent of company’s total sales constitute its flagship brand Corolla. Rest 46 per cent of imports impacted Pak Suzuki Motor Company’s sales. Latest data shows 17,000 cars were imported in the country during Jul-Oct12 period. Segment-wise data gives an idea that 53 per cent of total imports comprises 1300-1800cc category dampening Indus Motors’s sale while 47 per cent is giving tough competition to PSMC.

Auto industry sources stated that the ECC decision is scheduled to be implemented from Dec 15, 2012 while investors already having inventory in the pipeline will be given some additional time for its clearance. As per industry sources, there are approximately 30,000 cars in-hand for sale and about 5,000 units of inventory is in the pipeline. Consequently, even after implementation of the above decision, it would take around 6-8 months to absorb the current inventory levels, claims analysts at AHL in a report. Therefore, it should take roughly 6-8 months before local assemblers feel the benefit from these import curbs, they added. Therefore, keeping such large import volumes in the pipeline, one should expect strong resistance with respect to such decision and increased likelihood of its U-turn.