Auto industry in shambles due to dull consumer demand.

• Author: Nisar, Ahsan

Byline: Ahsan Nisar

Auto industry was the highest tax-paying industry during the last government's tenure followed by cigarette, tobacco, telecom sectors. Presently, the automobile industry is going through worst crisis amid rising prices due to imposition of new, higher taxes in the budget and steep currency devaluation in the recent months and now the government is expected to receive less tax by Rs150 to Rs200 billion from the industry due to the emerging situation. In the current situation of economic crisis, the auto manufacturing giants in the country are halting their vehicle production, thus leading to a direct impact on the auto vendors industry which supplies parts for assembling.

It is pertinent to mention here that the auto industry was expecting to increase its sales to half a million units by 2022. But now the situation is that Suzuki company has shown deficit and Honda and Toyota may also show deficit if the situation did not improve. Sale of vehicles has dropped by 50 to 60 percent till June 2019 as compared to sales till June 2018. As a result, Honda and Toyota have laid off hundreds of employees due to closure of plants.

The leading Japanese auto manufacturers in Pakistan, including Suzuki, Honda, and Toyota are struggling due to a massive decline in their car sales. As a result of the reduced demand in the market, the supplies have exceeded considerably hence forcing them to reduce their production days. It will be a massive blow for the industry as the auto vendors get a serious hit on their businesses as well. The overall situation has left thousands of employees jobless in Pakistan.

The sales have been on the decrease for the last three months as total car and light commercial vehicles (LCV) volume contracted by 5 percent to 17,561 units in June from a year ago. Overall, the car and LCV sales plunged by 7 percent during the last fiscal year to 240,335 units from the previous year. The impact of implementation of 5 percent Advance Customs Duty (ACD) on all raw materials and parts used by the local assemblers...