Honda shutdowns rise, Suzuki output stable

Updated September 27, 2019

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In this file photo, workers are seen working at a local auto plant. The recent developments in the auto industry are unprecedented and proving to be tough for stakeholders including auto industry workers.
In this file photo, workers are seen working at a local auto plant. The recent developments in the auto industry are unprecedented and proving to be tough for stakeholders including auto industry workers.

KARACHI: Honda Atlas Cars Ltd (HACL) has reduced working days to 11 in September due to rising unsold stocks and depressed demand. The working days were 13 in August and 20 in July. However, the situation at Pak Suzuki Motor Company Ltd (PSMCL) is less critical.

So far PSMCL had not observed any ‘non production days (NPDs)’ as the new Alto 660cc has seen continued demand and emerged as the main driving force for the company with sale of 8,109 units during July-August 2019. This is despite the 71.5 per cent sales plunge in its flagship WagonR during July-August 2019 compared to same period 2018.

Spokesperson of PSMCL, Shafiq Ahmed Sheikh also confirmed to Dawn that “the company has so far not observed any NPDs. We are monitoring the situation and by end of this month we will review our production and sales outlook of July-September and future prospects of sales in coming months,” he said.

He further rejected social media reports regarding suspension in booking of various vehicles due to falling demand. “Booking of new cars is going on,” he said.

Sources said Honda Atlas Cars Limited has unsold stocks of over 3,000 units at the plant and various dealership networks. Due to closure of second shift, around 1,000 contractual employees have lost their jobs in the last three months.

Honda Civic and City production and sales have plunged to 3,520 and 2,588 units in July-August 2019 from 8,161 and 8,078 units in same period last year. BR-V production and sales plunged to 538 and 450 units from 959 and 864 units.

“The meltdown in the auto industry is far more frightening than expected,” CEO-Partner of Honda Drive-In and Honda Quaideen, Shabbir Alibhai said. Since the start of 2019, sales have plunged to 30pc of those in 2018.

He said registration of new vehicles in Karachi hovers between 40-45 units per day versus over 200 units per day last year. Auto loan financing by the banks is at its lowest – hardly 20-25pc from the previous years due to shrinking demand and high interest rates, he added.

Insurance companies have also started delaying payments of repairs to work shops from a cycle of 45 days to 90 days. That too, if the financial position is strong enough to sustain the business as the number of insurers has fallen, Shabbir said, adding that low sales will hit government revenues.

He urged the government to seriously look into the issue as more layoffs are expected across the board. The new players are going to be most affected as they have made huge investments.

IMC, the maker of Toyota vehicles, had shut down all production for the remaining days of September, bringing the total number of NPDs to 15 in the month due to continuing fall in demand. The company had already observed eight NPDs in July and 11-12 NPD in August.

IMC plant and countrywide dealership network has piled up unsold inventory of over 3,000 vehicles. The plant is running at 50pc less capacity in September.

Published in Dawn, September 27th, 2019