Toyota Indus Motor Company (IMC) has made it clear that despite another reduced production month, the automaker will not layoff any employees.
According to the details, the Japanese auto manufacturer will again observe nearly 15 non-production days (NPD’s) in October. It means that Indus Motor will keep running its production plant at 50% capacity due to reduced demand in the market. For the last three months, the company is suffering from a significant drop in sales, thus forced to shut down its plant for several days. However, IMC has cleared that in these circumstances, the financial pressure on the company will not be released by laying off the employees, which is good news for those working with them. According to a spokesman of Toyota Indus, the depreciation in the value of Pakistani Rupee against the US dollar, high-interest rates of banks on car financing, and the imposition of additional taxes and duties by the government have been the primary cause of declining sales in the local market. The country is going through an economic contraction period, and the same is the case with the auto sector as it keeps struggling in car sales.
Apart from Toyota Indus, this period has been a significant struggle for all the auto manufacturers, particularly Honda Atlas, which is in deeper waters than anyone else. The overall sales in the first quarter of the fiscal year 2019-20 went down by 39% as compared to its corresponding period last year. The sales of Toyota Indus plunged by 56% in this period, which is second-worst among the three Japanese auto giants in the country. Honda Atlas leads the way with a nearly 67% decline in car sales. It is also pertinent to mention here that the value of rupee has fallen by more than 30% in the last 12 months or so, which has adversely affected the prices of automobiles. The local auto sector went into more struggle as the government imposed Federal Excise Duty (FED) of 2.5% to 7.5% on all types of engine capacities. Furthermore, the additional customs duty (ACD) and additional sales tax have also contributed to the process during this period. In these circumstances, the company aims to absorb all the financial pressure and not fire its employees despite a reduction in operations to less than 50%.
The company believes that the additional taxes imposed by the government are not helping the auto industry. Perhaps the collection of a high amount of taxes on small sales volumes will not help in collecting a hefty amount of revenue. As a result, the tax collection has decreased due to a fall in sales of automobiles. According to a spokesman of IMC, the company has moved towards higher localization with the roll-out of each model in the local market. At the same time, the automaker has enhanced the features in its cars by procuring more local parts. In a bid to keep facilitating its loyal customers, Indus Motor has sustained the burden of all the hefty taxation imposed on the vehicles and provided quality products at competitive prices. Note here that it’s currently struggling with the sales of its popular Corolla sedan in the local sector. The company will also discontinue its 1.3-liter variants from the market soon. It will then be replaced by Yaris for the first time in Pakistan. Toyota Yaris has already been spotted several times on the roads of Pakistan while testing. On the other hand, car sales are expected to stay the same way until December as the purchasing behavior of the consumers is usually on the lower side towards the end of the year.
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