KARACHI: In contrast to ongoing construction of an auto assembly plant in Hub for rolling out Skoda and Volkswagen vehicles, the existing auto players and vendors are in a state of paralysis due to severe paucity of foreign exchange and supply issues in parts.

In a joint letter, Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) informed State Bank of Pakistan Governor Jameel Ahmed on Thursday that the industry was facing extinction as all supply lines of imported parts and accessories and tooling are completely chocked due to SBP’s restrictions and lack of cooperation from banks.

As a result, factories intermittently shut and workers are being retrenched by both the assemblers and their vendors. If corrective measures are not taken, this scenario would lead to massive unemployment, loss of government’s revenue, closure of auto assembly plants and flight of capital.

Direct and indirect controls imposed on opening of letters of credit are the prime cause of above industrial breakdown, PAMA and PAAPAM said.

As per figures of Pakistan Bureau of Statistics (PBS), import of completely knocked down (CKD) kits for cars had plunged by 38 per cent to $499m in 1HFY23 from $808m in the same period last fiscal year.

On Wednesday, German Consul General, Dr Rüdiger Lotz visited the Premier Motors Ltd’s automotive manufacturing (CKD) plant for Volkswagen AG vehicles, which is currently under construction in Hub (Balochistan).

This collaboration between PML and VW AG Group involving investment of approximately $100m would mark the entry of locally assembled premium cars of Skoda and Volkswagen for the very first time in Pakistan, says a press release.

Published in Dawn, February 3rd, 2023