Honda Atlas Halts Car Production in Pakistan

Honda Atlas has shut down its plant for 10 days on Friday as its inventories have piled up to 2,000 units due to diminishing car sales. Car sales have badly suffered amid rising prices due to imposition of new, higher taxes in the budget and extreme currency devaluation in the recent weeks.

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Honda had kept its plant closed for two days earlier last week. However according to Dawn, Indus Motor Company (IMC), the assemblers of Toyota cars in Pakistan, has also decided to stop car production for 8 days (2 days a week) during this month. On the other hand, Pak Suzuki will reportedly take decision whether or not to cut down production in the next few days after analyzing sales trend and flow of booking orders during the present month.

Honda and Toyota executives, while speaking to Dawn on the condition of anonymity, said their decision to scale down production during July was due to poor sales in the first 10 days of the current month. A senior Honda executive said:

“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 persists, 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.”

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The impact of implementation of 5% ACD on all raw materials and parts used by the local assemblers and imposition of 2.5% to 7.5% FED from 1st July has started resulting in further decline in sales. Industry sources expect a significantly large dip in sales by the end of this year.

Source: Dawn

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