Big 3 to Cut Production of Cars in 2019

Pakistan’s three major auto assemblers are revising their monthly production schedules from this month foreseeing a major slowdown in sales towards the second half of the current fiscal year.

Related: Car Sales Declined Sharply in November 2018

According to Pakistan Automotive Manufacturers Association (PAMA), the move has come due to the restrictions enforced by government, that stops companies from selling vehicles to non-filers of income tax.

According to the CEO of Indus Motor Company Ali Asghar Jamali, who is also the vice chairman of PAMA, the country’s car market is going to shrink by 10% due to the ban on non-filers. The industry’s growth momentum has just vanished and now it is facing a downward trend in sales. Ali Asghar Jamali revealed:

We have revised our production schedule and will produce around 1,000 less cars during January against the planned production for the month.

He mentioned that the company’s annual production target, which was set at 72,000/74,000, has now been revised to 62,000/64,000 units for this year. Meanwhile, Suzuki’s spokesperson told Dawn that the company has already suffered 32% production and sales losses.

Related: Pak Suzuki Posts 55% Decline in 9 Month Net Profit

The impact of downward revision of orders from original equipment manufacturers (OEMs) has started to hurt auto vendors too. Syed Nabeel Hashmi, former chairman of Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), feared that if the government fails to address the worsening situation, the automotive market might shrink up to 30% by March.

Slowdown in Sales

The three car assemblers (Toyota, Suzuki and Honda) produced 113,494 vehicles of different engine capacity in the first six months of the current financial year but sold only 104,038 units. In comparison, 107,787 units were produced and 103,432 units were sold during the same period in the last fiscal year. Suzuki, which monopolizes the 800cc and 1,000cc segments, has been the worst hit by the slump in car sales and has built up a large inventory, especially of Suzuki Mehran. The company could sell only 75% of the 22,298 units of Mehran it produced, due to the band on non filers.

Related: Used Car Imports Shaken Due to Latest Policy

According to information, nearly 60% of car buyers in Pakistan happen to be non-filers, majority of which fall into Suzuki’s bracket as the company was wholly allowed to enjoy this market segment until now.

Full story: Dawn

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