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Demand for used cars increases as banks refuse credit - Naveed Yaseen - 01-17-2009 07:31 AM
* PAMA reports decrease in sales of new cars by 55 percent during 2008 * Jail Road Traders Association general secretary says sellers of used cars hard to find
* Dealer says cars used for five years in high demand
By Nauman Tasleem
LAHORE: With an increase in the prices of new cars and a decrease in the availability of credit from banks, the markets are suddenly facing a shortage of used cars, sources told Daily Times.
The prices of used cars had already seen a 20 percent increase three months ago, and are again seeing an increase of four to nine percent.
Car dealers on Jail Road said they were in trouble because of the sharp decline in the sales of new cars. They said the tough conditions imposed by banks were discouraging buyers, adding that customers were more inclined to buy used cars resulting in an increase in their prices.
Decrease in 2008: Meanwhile, the Pakistan Automotive Manufacturers Association (PAMA) said local car sales decreased by 48 percent from July to December 2008, while a total decrease of 55 percent was seen throughout last year.
A car dealer, Rizwan Goraya, told Daily Times the there were over 150 car dealerships on Jail Road, most of which sold both new and used cars. He said over the last seven years, with the help of relaxed bank leasing, the business of new cars progressed at a staggering rate. However, due to factors that include rapid inflation and the global financial crisis, customers are now turning to new sources to fulfil their needs, he said.
Goraya said about three years ago he used to sell 15 to 20 new cars in a month, but now the sales had dropped to two or three vehicles. “For the last one year, the prices of new cars have been rising and the banks raised the mark-ups on leasing, which resulted in a decrease in sales,” he said. “The number of customers for second hand cars increased sharply,” he said, adding he used to sell five or seven used cars in a month but now the number of used cars being sold has gone goes up to 20.
Sellers: However, the availability of used cars remains a problem for the dealers, Jail Road Traders Association General Secretary Zafar Iqbal said.
“In the past, we were less interested in deals involving second hand cars but now the situation has changed, and now we are interested in used vehicles while sellers are hard to find,” he said.
Four or five years: Muhammad Usman, another car dealer said the prices of new 800 CC cars had increased by around 45 percent, while the prices for 1,000 CC cars had increased by 40 percent. He said a standard 800 CC car that used to cost Rs 325,000 last year was now sold for Rs 447,000. He said the prices of second hand cars had also surged by 25 percent and an increase in the original prices would cause another increase. “Vehicles that have been used for four to five years are in high demand and the prices of these models have increased,” he said, adding that people had earlier used to come to sell second hand vehicles but dealers did not take interest. “Now, we have to look for the sellers of used vehicles,” he said.
Pak Suzuki Motors Company Marketing Manager Shehzad Hameed said the company had to increase the prices of vehicles because of the appreciation of the Japanese Yen and US Dollar against the Pak rupee.
http://www.dailytimes.com.pk/default.asp?page=2009\01\17\story_17-1-2009_pg13_7