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Honda and Indus Motors cease car production in Pakistan

Honda Atlas Cars and Indus Motor Company shut down their plants

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On friday HACP shut down their plant for 10 days due to its inventories piling upto 2,000 units as it’s car sales plunge due to the imposition of new, high taxes and steep currency devaluation which caused the prices to rise in the recent weeks.

Similarly IMC which produces Toyota models also halted car production for eight days, two days every week.

Pakistani Suzuki Motor Company spokesman told Dawn newspaper that the company will analyse sales trend and the flow of booking cars in the current month and then make a decision as to whether or not they should cut down the production.

Both HACP and IMP executives stated the same reasons for their decision to reduce the production was solely due to monotonous sales in the start of this month.

“Our inventories from the last month and the first 10 days of July have grown rapidly because of steep increase in car prices after currency devaluation as well as imposition of Advance Customs Duty (ACD) on all our imports and Federal Excise Duty (FED) on assembled cars, leaving us with no option but to shut down the plant to cut production. If the present trend holds, we expect our sales to drop to less than 30,000 units this business year (April 2019-March 2020) from over 48,000 units last year,” a senior executive of HACP explained.

“It is a very serious situation for the local car manufacturers who are piling up inventories,” said the IMF official.

The sales have been going downhill for the past three months as total car and light commercial vehicles (LCV) volume contracted by 5pc to 17,561 units in June last year. Overall, the car and LCV sales dropped down by 7pc during the last financial year to 240,335 units from previous year.

The impact of implementing 5pc ACD on all raw materials and parts used by the local assemblers and introducing 2.5-7.5pc FED from 1st July has also contributed to a further decline in sales.

Sources from the industry are expecting a large drop in sales by the end of 2019. It was previously said that the industry was expecting to increase its sales to a half million units by 2022.

 

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