Car prices slashed:

Car prices slashed:

KARACHI: Two leading auto manufacturers on Monday cut prices in a positive gesture to the government decision of removing the five per cent federal excise duty (FED) from next fiscal year 2009-10.

The cement makers also reduced the 50-kg cement bag price by Rs10 following the Rs200 per ton cut in excise duty.

The Indus Motor Company (IMC) brought down its prices by Rs60,000-90,000 and Pak Suzuki Motor Company (PSMC) by Rs29,000-54,000.

Other car manufacturers are likely to follow suit.

The IMC cut the Corolla XLI and GLi prices to Rs1,239,000 and Rs1,354,000 from Rs1,299,000 and Rs1,419,000, respectively.

The 2.0D, 2D Saloon and 2D Saloon SR were now priced at Rs1,287,000, Rs1,639,000 and Rs1,724,000 as compared to Rs1,349,000, Rs1,715,000 and Rs1,809,000 respectively. Altis manual transmission, Altis manual transmission SR, automatic and automatic sunroof price had been reduced to Rs1,639,000, Rs1,724,000, Rs1,724,000 and Rs1,809,000 as compared to Rs1,719,000, Rs1,809,000, Rs1,809,000 and Rs1,899,000.

The IMC asked its dealers to inform the customers that all orders in hands as of June 13, 2009 would also be invoiced on the revised prices. All refund cheques on account of FED and sales tax thereon would be handed over to the dealership with vehicle invoice and documents.

The price of Suzuki Alto VXR petrol and CNG had been reduced to Rs588,000 and Rs637,000 from Rs617,000 and Rs669,000. Cultus petrol and CNG versions� price had been declined to Rs750,000 and Rs790,000 from Rs787,000 and Rs829,000 while Liana RXi petrol and CNG versions� new prices were Rs952,000 and Rs1,024,000 as compared to Rs999,000 and Rs1,075,000. The 1,600cc Liana price had been cut to Rs1,086,000 from Rs1,140,000.

It would not be a big relief for the prospective Toyota car buyers as the company had already pushed up the prices of three versions of Corolla by Rs30,000 in May.

However, Suzuki car lovers may benefit most after price reduction as the company had already reduced the rates up to Rs55,000 in April.

Pak Suzuki Motor Company Senior General Manager Ashfaq Hussain said the July-December period would be much better in terms of car demand over the first half of this calendar year.

However, he said the cars below 850cc, which hold major share in overall car sales, would not see any price cuts as the FED was imposed above 850cc. The company was expecting a cut in general sales tax on 800cc cars as it would have proved a big relief for the users of Mehran, Ravi and Bolan.

He however said that the demand for cars would hugely depend on the currency stability and further cut in car financing rates. Any depreciation of the rupee against the yen would again push up the prices.

Ashfaq said that there was some decline in car financing by two per cent to 19 after cut in interest rate by the State Bank but it was still not enough to stir the demand. �The government should focus on cutting the interest rates further,� he suggested.
He said the share of car financing in total sales was 70 per cent in 2006-07, which now hovers around 20-25 per cent.

Sales of locally produced cars during July-May 2008-09 fell to 75,293 units as compared to 149,527 units in the same period of last fiscal.

Mohammad Sohail, the chief executive of Topline Securities, said that the car demand was likely to rise after price cut, slight improvement in economic indicators and further cut in interest rates.

He was of the view interest rate charged on car leasing and financing hovered between 17-18 per cent.

�I think there will not be any negative growth in new fiscal year as compared to massive decline in growth in the outgoing fiscal year,� he believed.

A leading cement maker said that all the manufacturers had reduced the rate. �The ex-factory price of various cement bags in Karachi now hovers between Rs305-330 after the Monday�s price cut,� he added.