KARACHI, Nov 17: The automakers and vendor industry will seek a rescue package in a meeting with Shaukat Tarin, the adviser to the prime minister on finance, this weekend to save the entire industry from virtual collapse amid plunging sales that has triggered massive layoffs.

The adviser will be informed about the elimination of about 50,000 jobs in the entire vending industries in the last six months out of total 200,000 due to persistent decline in orders of parts and accessories from the vehicle assemblers.

A random visit to eight to nine auto parts making plants near Bin Qasim area reveals a dismal picture.

The owners of these units told Dawn that they had already cut jobs and were mulling further downsizing in case they fail to get reasonable volume of orders from the Original Equipment Manufactures (OEMS), the auto assemblers.

Representatives of Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) have decided to jointly take up the issue with the adviser.

The associations have already informed the Planning Commission about the ailing health of the entire industry especially car and LCV whose sales plunged by 37 per cent to 40,474 units in July-October 2008 as compared to 63,765 units in the same period last year.

In cars only the sale has dropped by 44 per cent to 28,665 units in the July-October period as compared to 51,454 units in corresponding period of last year.

PAAPAM Vice Chairman Jawed Shaikh said that in Bin Qasim area alone 15 vendors invested over Rs3 billion in the last two years in anticipation of Auto Industry Development Plan (AIDP) and future commitments of the government.

“But, these huge investments are currently unproductive and may cause total collapse of these companies,” he cried.

He disclosed that the vendor industry across the country has invested over Rs30 billion in expansion from 2006 in view of achieving the AIDP objectives of producing 500,000 cars by 2011-2012 from 160,000 units in 2006-07, 1.7 million motorcycles from 839,224 units, making investment of Rs225 billion from Rs98 billion, boosting contribution to GDP to 5.6 per cent from 2.8 per cent and Rs190 billion in indirect taxes from Rs63 billion and gross sales turnover to Rs600 billion from Rs214 billion in 2006-07.

Even the AIDP has also projected employment numbers to reach over 250,000 by 2011-2012 from 200,000 in 2006-2007 “but 50,000 people have already lost their jobs,” he added.

He said that the associations would present their demands before the adviser seeking immediate government help. The major demand will be abolishment of five per cent of federal excise duty as this levy has already increased the prices of cars and LCVs causing downward trend in sales and reduction in government revenues.

Mr Jawed said the adviser would be asked not to legalise the import of banned items like used parts, dumpers, lorries, etc., by payment of 30 per cent redemption fine. Besides, further restriction on the import of parts that are locally manufactured will be demanded as under the current AIDP rules these parts are freely importable by paying additional duty at 15 per cent.

Reduction in registration charges for locally manufactured vehicles will be sought, which is a provincial subject, he said.