Auto sector’s dismal situation to continue in October

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KARACHI: After a steep 39 percent overall fall in car sales during the first quarter of the current fiscal year, the worsening situation of the auto sector will continue as Honda Atlas Cars Pakistan Ltd (HACPL) will observe 16-18 non-production days (NPDs) in October, reported Dawn.

HACPL had reduced working days to 11 in September as against 13 in August and 20 in July. The company has still around 2,000 unsold vehicles at the plant and dealership network as compared to 3,000 units last month, claimed the report.

The production of cars at Indus Motor Company (IMC) in September was at less than 50 percent capacity and the situation is expected to remain the same in October, claimed the report.

Pak Suzuki Motor Company Ltd (PSMCL) also had a bad first quarter FY20 but so far it had not initiated any NPDs from July till to-date despite suffering massive 73 percent fall in WagonR sales in first quarter of 2019-20 as well as drop demand for other Suzuki vehicles.

Already under stress assemblers anticipate sales slowdown during October-December period as customers like past practice usually avoid purchasing vehicles due to change in model year, claimed the report.

Another reason of falling sales is absence of investors from the car market. The Federal Board of Revenue (FBR) is now more vigil in looking after those people, who without declaring their income, used to invest in cars to whiten their black money.

According to the report, car assemblers and vendors said the government would face tax collection shortage of Rs2 billion per month due to gloomy sales situation. The government takes away around 40 percent of taxes on car’s retail price.