KARACHI, Jan 28: The car assemblers maintained a slow pace in production during January 2008 after slashing parts procurement from their vendors by at least 50 per cent.

They had also revised parts procurement for November and December last year by 50 per cent after a series of violent incidents culminating on the murder of Benazir Bhutto on December 27.

A number of vendors on condition of anonymity said that the imposition of emergency and killing of the PPP chairperson made a negative impact on the consumers’ buying sentiments thus affecting the local car sales, especially in some versions of Suzuki Cultus, Alto, Mehran, Ravi and Bolan.

Sources in the car industry said that the parts procurement plans for February and onwards has also been slashed for Cultus and Alto, especially.

They said that the makers of Toyota Corolla and Daihatsu Cuore had also curtailed the parts supply for January production by 45 and 28 per cent, respectively.

However, the plant of Indus Motors, maker of Toyota and Cuore, remained shut from the first 10 days of January, 2008 and the depressed demand did not prompt the manufacturer to make additional cars for the rest of working days.

The manufacturer of Honda Civic and City cars had also curtailed purchase of car parts from vendors by at least 40 per cent in January and as a result, their production had remained limited.

The vendors and the assemblers now pin hopes on peaceful passage of elections and the post-election scenario as some vendors think that the demand for cars may pick up slightly by May and June in case everything remains stable both politically and economically.

Suspension of auto financing by many banks, high interest rates, rising default rates on cars instalment payments and increase in prices are some of the main reasons impeding the growth in the locally assembled cars industry. Few years back, car assemblers used to show 25-30 per cent growth in production.

To offset the negative growth in car production and sales, the Pakistan Automotive Manufacturers Association (PAMA), on the instruction of the Engineering Development Board (EDB) included Suzuki Bolan in the category of cars for the last many months despite the fact that Bolan had remained in the LCV category for decades.

This had helped in alleviating the growth in the production figures but in real sense the original car figures have been portraying a dismal growth.Excluding the Bolan Van figures, production and sales of cars in July-December 2007 stood at 75,261 and 69,950 units as compared with 73,005 and 71,027 units, respectively, in the same period in 2006. If Bolan figure is added, then overall production and sales of cars in the last six months amounted to 84,172 and 78,759 units as compared with 79,813 and 77,545 units in July-December 2006, respectively.

Production of Suzuki Cultus in October was recorded at 3,131 units, which fell to 2,047 in November 2007 and 1,739 units in December. However, Alto had 1,590 units in October rising to 1,947 units in November 2007 and then falling to 1,452 units in December. Liana production in October, November and December were 439, 306 and 10 units, respectively.

Honda Civic production in October was 662 units falling to 423 units in November and 363 units in December. Likewise, City production recorded only 297 units in December as compared with 778 in October and 657 units in November.

Toyota Corolla production improved in November 2007 to 2,702 units from October’s 2,543 but declined to 1,690 units in December.

Hyundai Santro production in October was 134 units but came down to 86 units in November and 81 units in December.

Sales of Daihatsu Cuore in November rose to 960 units from October’s 749 units but plunged to 443 in December.

Suzuki Mehran in December fell to 2,193 units from 3,475 units in November. It was 2,814 units in October.

An analyst at Jehangir Siddiqui linked the decline in December sales to Eid holidays, killing of Benazir Bhutto, suspension of auto financing by many banks and price hike after new tax levy.However, a vendor said that the companies had rescheduled parts procurement plans several times in January 2008 in view of the uncertain situation after December 27 tragedy followed by various incidents of bombing. He added that the January production of the PAMA will reflect at least 40 per cent decline.

Vendors were of the view that the target of five million cars and LCVs set by the Engineering Development Board (EDB) for 2011 would not be achieved owing to current political uncertainty.