No Demand for Cars Despite Ease in Lockdowns

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The opening of authorized car showrooms from Monday after easing of COVID-19 lockdowns has not generated any fresh booking of locally-assembled cars, according to a report published in Dawn.

Related: Auto Vendors Warn Layoffs and Salary Cuts Amid COVID-19 Lockdowns

Dealership owners usually experience brisk sales ahead of Eid every year as many people prefer to purchase new cars either by booking months ahead to get timely delivery before Eid or paying ‘heavy OWN money’ to buy on spot at showrooms. However, the pandemic has dried up the demand for local assembled new cars. According to an official from Honda authorized dealership in Karachi:

“Neither online booking is attracting buyers nor are customers visiting dealerships in larger numbers despite easing of lockdown. I got a booking for just one vehicle in the last two days as compared to an average of five to six vehicles a day prior to lockdown.”

The official added that abiding by the standard operating procedures (SoPs), the dealerships are only calling some of their staff to work at offices and are refusing to accept vehicles for repairs in large numbers.

No Demand for Cars Despite Ease in Lockdowns 1

For the first time ever, local assemblers witnessed zero sales in the month of April due to COVID-19 lockdowns and their assembly plants are shut since 22nd March 2020. The situation in the month of May is expected to be as depressing as April since the production operations are yet to resume. This has brought the local auto sector on the brink of a collapse since car sales were already on a nosedive ever since the beginning of the ongoing fiscal year.

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Due to a halt in production operations, the delivery scheduled is also badly affected and cars that are now being booked are getting tentative delivery time in August. According to an official from Toyota dealership, sales during the month of May are so far zero. Another official from a different dealership said online booking has also remained negligible as people usually make inquiries rather than booking a vehicle.

No Demand for Cars Despite Ease in Lockdowns 2

According to the official from Honda dealership, government can help auto sector by bringing down duties and taxes on cars which would eventually bring down prices and attract customers into buying cars.

Related: Assemblers Shrewd Enough to Increase Prices Ahead of Budget FY20-21

However the constantly increasing car prices along with high interest rates are one of the key factors that have pushed majority of the new car buyers away. Furthermore, sensing tax cuts in forthcoming budget, local assemblers have given yet another push in prices which is nothing but a move to avoid price reductions in the post-budget scenario so as to keep their profit margins in check.

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TiredOfThisShit
6 months ago

“Furthermore, sensing tax cuts in forthcoming budget, local assemblers have given yet another push in prices which is nothing but a move to avoid price reductions in the post-budget scenario so as to keep their profit margins in check.”

Crux of the matter and must be highlighted repeatedly at all levels to generate enough pressure on local assembler mafia.

If they can’t reduce prices by atleast 25% on all models to begin with before any reduction in taxes and duties, they should pack up and move to India.