LAHORE: Car production would be another major industrial target that is likely to be missed as banks reduced car finance due to increase in bad debt while middle class has also opted out of car finance on account of high mark-up.
Industry experts said it would be impossible for the car production to cross the 200,000 units’ mark this year as is envisaged in this year’s target. They said it would be a miracle if the industry could achieve last year’s production level. They predicted the car production this year would be about 150,000 units that would be 25 per cent below the target.
The News has learnt the auto-vending sector is in dire trouble as the decline in the car production coupled with tendency of assemblers to import localised parts by paying higher duty has reduced their orders by 40-50 per cent.
Vendors complain the government failed to implement its auto-policy in its true spirit. They claim that the local auto-parts are much cheaper if actual duty is paid on imported part. They said the government imposed 50 per cent import duty on auto-parts that are manufactured in the country. However these parts in many cases they claimed are imported well below even the cost of raw material used on them. They said this makes the high protection duty meaningless.
Moreover they added the past government policy of allowing import of used cars impeded the growth of local automobile sector. They said the high mark-up on car financing was already slowing down the car loans but the defaults have practically stopped this process. They said the value of used cars has declined very sharply due to complaints about their quality.
They said the government stopped unregulated import of used cars when it realized its blunder. The banks compounded damage by granting liberal car financing on those vehicles with the result that the auto-industry is also suffering.
Former chairman Pakistan Association of Auto-Parts and Accessories Manufacturers (paapam) Syed Nabeel Hashmi said a large number of auto-vendors have closed their units for the time being as they could not afford the losses they suffered from infrequent power outages and non-availability of natural gas.
In fact he added some vendors even laid off their entire workforce. He said at least 15,000 workers in the auto-vending industry have been unemployed. He said the car production is not likely to suffer as the production has already slowed down but the tractor production is still on the rise. He said most of the tractor parts are made from iron ore or pig iron. He said there is acute shortage of these two vital raw materials.
Moreover he added the engineering industry that melts steel couldn’t operate without sustained supply of gas and electricity. Some vendors complain that the Engineering Development Board and the Custom Department have remained aloof to the miseries faced by the auto-vendors.
They said tractor manufacturers for instance are importing tractor parts from India via Dubai. They said the import of these parts has been banned. They said their claim could be verified if the officials of these two institutions pay a visit to any tractor assembling facility of the country. They said the parts manufactured in India could be easily found in the assembly lines.