Automakers scale back production
KARACHI: Auto assemblers have decided to slow down their production in the current month amid backlog of unsold stocks, slowdown in new booking and on spot sales, substantial hike in vehicle prices and new budgetary measures.
Honda Atlas Cars Ltd (HACL) has decided to cease production of vehicles from July 12-21. It has already been observing Saturday as a holiday for the last two months, a Honda car dealer said on the condition of anonymity.
The company’s sales have been under pressure since January, following non-filer issue coupled with the imposition of 10 per cent Federal Excise Duty (FED) on Honda Civic which holds 40pc share in total HACL sales. The government in the latest budget has levied FED in the range of 2.5-7.5 per cent on vehicles of various engine power.
Since January, Honda has been producing around 160 vehicles per day, down from 220 per day prior to that month.
The Honda dealer said the current situation has been a turnaround for the Japanese car assembler that was producing vehicles in double shift a year ago.
According to him, the government has further dented the auto industry with additional taxes and duties in Budget 2019-20 such as five per cent additional customs duty on imported parts coupled with new rates of FED. Car prices had gone too high due to the said changes in duties and taxes as well as persistent rupee devaluation against the dollar.
Figures from Pakistan Automotive Manufacturers Association (Pama) show Honda Civic and City sales in 11MFY19 decreasing to 37,083 units from 39,869 units while Honda BR-V sales declined to 4,593, from 7,999.
Meanwhile, Indus Motor Company (IMC) has decided not to roll out vehicles for eight days of this month besides already observing two off Saturdays. “Our plant will remain shut for at least 10 days in July,” a company official informed.
He attributed the lacklustre business trend to consumers’ reluctance in purchasing vehicles following steep rise in prices triggered by rupee devaluation, fresh taxes and duties in Budget 2019-20 and high interest rates.
They said the overall business environment has become tense after budget, resulting in strikes and protests by the trading community coupled with shutdown of many industries including textile processing mills.
However, the current fiscal year has so far proved quite brisk for IMC which sold 52,314 units in 11MFY19 versus 47,866 units in same period last year.
Published in Dawn, July 10th, 2019