Consequently, its contribution to the national exchequer is to increase from the present figure of Rs 26.1 billion to 94.95 per year. These are pretty impressive figures. But they are not much help to the consumers, for whom car buying can turn out to be quite a frustrating experience.
A combination of factors, including a poor mass transit system, significantly low interest rates, and easy availability of credit for consumer goods, have made automobile the item of choice for a large number of people.
The recently imposed State Bank restriction restraining banks from financing the premium on automobiles is expected to impact on the middlemen in this sector but to what extent remains to be seen. Yet even though some of the features of consumer cultures are beginning to become visible in this society, the auto industry sector has failed to keep pace with the new demands.
Our report, quoting market sources, points out that during the first six months of the current fiscal year the production figures of various categories of vehicles, such as cars, trucks, buses, LCV/vans and SUVs, were supposed to be 77,674 units against the sale of 78,473 units.
Which amounts to more than hundred percent utilisation of the industry's existing capacity. To state the obvious, the assemblers had accepted orders for some makes of cars in excess of their production rate and sales averages, but to refuse to book orders is also not possible.
Situations like this allow car dealers to make their own investments in vehicle bookings, due to shorter duration turnover of funds, thus minimising their risks and earning hefty premiums on their orders. No wonder, the actual buyers have been constantly complaining and pressuring the government every now and then to ease off things by allowing import of both reconditioned and new cars so that the local assemblers and dealers do not take advantage of what they see as a captive market.
But, then, it is hard to ignore the fact that the local car industry not only makes major contributions to national income, it also generates substantial employment opportunities, especially in its auxiliary vending industry. As per current projections, the anticipated expansion in the vending sector alone is expected to increase jobs from the present number of 160,000 to 265,000. Of course, if the existing restrictions on imports are lifted, the government will still be able to earn sizeable amounts in revenue, but such a move will have devastating repercussions on the local industry, and resultantly on the job market.
Therefore, the government needs to come up with a balanced response vis-à-vis protection of the consumer interest as well as local car assembling industry. It is plain that any solution to the present problems has to be based on a policy that leads to more, not less indigenisation of production activity in the sector.
At the same time, efforts have to be made to attract new assemblers through fresh incentives. Increased local production in the sector, it goes without saying, will give a much-needed respite to car buyers, increase government revenues, and expand the job market.
This has to be done on an urgent basis so that the prospective car buyers do not have to endure excessive delivery delays and opportunistic middlemen's greed.