Master Motors has suspended bookings following an overwhelming response
Master Changan Motors has been forced to suspend bookings for its recently launched Alsvin sedan after an overwhelming response from customers, its CEO said Tuesday.
But the question is whether this will create another opportunity for investors to earn own-money or the company may find a solution to it.
Pakistanis are unable to buy new cars on an immediate basis, especially the popular models. This is because they are not readily available. A buyer has to wait for as much as six months in some cases after the booking.
Investors, who make these cars readily available to buyers, charge a price higher than the actual price. This additional amount is called own-money.
Master Changan Motors CEO Danial Malik says the issue is not just limited to the car industry. There is black money circulating in the economy and it is directed wherever there is higher demand and a chance to artificially increase prices, according to Malik.
This money is used to inflate prices of other commodities as well as the real estate, he told SAMAA Money.
Master Changan Motors has tried to curb the menace of own-money by letting an individual book only one car on their CNIC, its CEO said. It stopped booking more cars as the delivery period would exceed four months, which the buyers don’t like and investors start investing thereon.
But carmakers can’t curb the own-money menace alone, he says. “The economy needs to be formalized to keep investors from distorting demand and supply.”
The government’s plan to impose up to Rs200,000 withholding tax on the sale of a new car would help curtail the own-money issue, says Shabbiruddin, the sales and marketing director of Master Changan Motors.
The FBR will charge Rs50,000 for cars up to 1,000cc, Rs100,000 for cars between 1,000cc and 2,000cc, and Rs200,000 for vehicles above 2,000cc.
Asked about making these cars readily available to customers, Shabbiruddin said that they import parts for their vehicles and their delivery requires four months. It is difficult to forecast the demand four months in advance, he explained.
Due to an overall low demand that doesn’t make localization viable, the auto industry in Pakistan is heavily dependent on imported parts.
The demand for cars stands at 18 cars per 1,000 persons in Pakistan. In comparison, the US has a motorization rate of 800 and industries there are robust in supplying the required parts and material.
Sustainable high demand makes the supply chain robust, according to Malik. When demand for cars increases, there will be localization that will make the production process faster.