Beginning of the end of auto industry in Pakistan?

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As vehicles’ prices and taxes on them are on the rise, there has been a significant increase in unemployment of auto-workers. Thousands of the workers have inevitably been removed from the jobs in the past few months. Pakistan Association of Automobile Parts and Accessories Manufacturer (PAAPAM) Chairman Mohammad Akram has made a statement that car merchants have fired thousands of outsourced employees, daily wage workers, and contractual workers from July till today. All this due to a substantial decline in production and sales in the overall auto sector.

PAAPAM’s Chairman Remarks:

Chairman PAAPAM, Mohammad Akram during an interview with a local media outlet, stated that he had gone through the feedback of association’s 400 members across the country regarding cut-off of around 40,000 people in view of the informal fall in parts procurement by the car and other auto assemblers after massive sales drop. He also said:

“I see more joblessness in case the sales slowdown continues in the next two to three months,”

Chairman feared that this cycle of firing workers might continue in the coming months.  Soon permanent workers may be the new victims of this next phase of lay-offs.

He made it clear that 1QFY20 had already seen its end in red for the entire auto sector, while sales are probable to remain low until December. He blamed low localization in vehicles as the main reason for rising vehicle prices, especially for cars. PAAPAM’s chairman believes that higher localization can prevent the continuous increase in prices of cars.

The firing of auto workers caused some serious problems for the car vendors and auto industry. However, on the other hand, recently, Indus Motor Company (IMC) — the producer of Toyota vehicles — has made sure that it will not downsize and layoffs its employees despite low sales. Something we all should appreciate.  IMC resumed auto production at half of its original capacity from Oct 1st, while its plant was shut down for the last 15 days of September.

That’s it from our side, drop your thoughts in the comments section below.

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  1. Mr. Steel says

    Doesn’t necessarily spell the end of Pakistan’s auto industry. This crisis may pressurize auto executives to increase their levels of localization. They have a greater impetus now to encourage technology transfer and share expertise with locals. Frankly, they need to stop hiding behind the excuse that Pakistan doesn’t yet have the capability to manufacture auto parts locally when they have done absolutely nothing to facilitate the growth of local expertise. And given their level of exposure to currency shocks, they deserve the punishment they’re getting in the form of this crisis. The only hedge against currency exposure is building local expertise.

  2. ishtiaq says

    thease autoindustry should introduce 660 cc to 1000 cc cars. suzuki alto is on rise

  3. Mohammed Tahir says

    This had to come some day, market simply does not have enough demand/sales for companies to set up manufacturing units. Secondly, the market does not have any strategic importance as there are already markets like India and Thailand nearby to act as manufacturing hubs, they can cater to local demand as well as exports. Infact, Was anyone except Suzuki manufacturing cars locally? From what I know Honda and Toyota simply ” assemble ” the cars and the localization levels are not same as say in India or Thailand. Infact Pakistan does not seem to have any major R&D center from any global automaker to completely develop, design and produce cars locally. Even markets like Indonesia also import a large amount of models except for MPVs.

  4. Asad Malik says

    Alto at the pice of city 2015-16 MSRP.Rupee is so devalued that any venture will lead to bloated car prices.As long as rupee remains weak there will be a permanent decrease in demand.Note that the average pakistani’s buying power is decreasing year on year basis.The economy and auto industry might take a decade to recover.In 2019 with no self sufficiency in manufacturing;Pakistan if there was a category for 4rth world country would certainly be one.

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