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Shrinking demand hits car production

Published Sep 25, 2012 02:43am


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– File Photo

KARACHI, Sept 24: The continuous slowdown in sale of locally-made cars is hampering production plans of auto makers resultantly a top assembler has decided to increase the non-production days (NPDs) in October.

On the other hand the vending industry is perturbed over the declining orders of parts and accessories from the assemblers since July this year.

Senior General Manager Marketing Indus Motor Company (IMC) Ali Asghar Jamali told Dawn on Monday that the company, after observing seven NPDs this month, intends to extend the NPDs to 10 next month, means curtailing production to 50 per cent.

“There is virtually slackness in demand and production of cars by at least 30-40 per cent,” he said adding that by same percentage the company has reduced the order placement for parts and accessories to its vendors.

“One of the main reasons of falling production is the heavy influx of used cars which is eroding the market share of local assemblers,” he said.

The IMC, he claimed, has 3,000 units of unsold stocks at its dealership network and at Karachi plant. However the company has so far not undertaken any downsizing of employees due to shrinking sales, Jamali added.

He said besides used car impact, recent floods in Punjab and Sindh and law and order situation also impacted car sales. He did not predict any recovery in sales in coming months in view of thriving arrival of used cars while much will also depend on the country’s economic and political situation.

Production of Toyota Corolla vehicles in August plunged to 2,627 units from 2,914 units in July 2012. However, sales in August improved to 2,800 from 2,464 units in July 2012. But Corolla’s production and sales dropped to 5,541 and 5,264 units in July-August 2012 as compared to 7,073 and 7,362 units in the same period of 2011.

A leading auto vendor claimed that vending industry is edging towards closure due to 50-60 per cent slump in demand of components from the assemblers in the last few months.

He said Pak Suzuki, which was producing almost 8,000 to 9,000 units per month few months back, is now rolling out 4,000-5,000 units.

He claimed that Pak Suzuki has given almost nil requirements of Cultus components for October 2012 because of accumulation of unsold stocks. Whereas requirement for Suzuki Mehran, Bolan and Ravi components have also been reduced sharply.

An official of Honda Atlas told Dawn from Lahore that despite launching of new Honda Civic model, which was quite supporting, sales remained depressed by 20 per cent.

He said the company had not reduced the production of Civic and City so far, but decline in buying of new cars would eventually result in drop in production.

On the other hand tractor industry and trucking industry is also facing difficult time because of low demand in the market. A tractor vendor said tractor demand of 50 Horse Power in market is still negligible.

Tractor production in August fell to 3,148 units from 4,566 units in July 2012 because of unsold stocks and sale of subsidised tractors in the market at less prices ranging from Rs.40,000 to 50,000 to original prices of tractors. Demand of tractors in coming months is still uncertain.


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Comments (6) Closed

Amjad A Sep 26, 2012 05:12am
I think Mr Musharraf Sultan had posted the ground reality in very convincing words. I think it is the time now that the local assemblers should stop looting their Pakistani brothers and have a sense to price their product in the right manner.
Ali Sep 26, 2012 04:43am
That's very nicely put. The consumers would care less if the auto industry is completely shut down.
Shahzad Mirza Sep 26, 2012 05:46am
My friend emailed me price list of new Honda Civic model last week. Its quite sad that with the same price I can buy superior models in UAE like Honda Accord or Toyota Camry with better quality and more options. For the sake of employment and taxes, all the car manufacturers are looting the innocent public. At the time of setting up the plant, they gave comprehensive future plan to Government of using more than 50% local parts to generate employment, local revenue and transfer of technology, but I am sure more than local parts are merely 20-25% including battery, fabric, floor mats without any significant transfer of technology. Why people of Pakistan have to pay more price for low quality products when they can efford better premium brand and quality at the same price for the thugs who have created cartel and monopoly.
KK Sep 26, 2012 03:06am
local car manufacturers knows it very well they can sell 15 to 20 year old model at price of new models, as there is no authority to check this fraud
Musharraf Sultan Kharal Sep 25, 2012 11:15am
Local car manufacturing companies only have themselves to blame for declining demand in locally produced cars. In a cozy environment with no foreign competition these local assemblers had been producing and selling poor quality vehicles at ever increasing prices to local consumers with little or no choice. Now that cars up to five year old can be imported from Japan with low mileage and extraordinary quality, who would want to purchase a substandard locally produced car at exorbitant prices. Had the age limit been increased to 10 years local, hardly anyone will purchase local vehicles. In that case local auto industry would have to either shape up or ship out. As for adverse impact on local employment in the automotive industry is concerned, the lager number of imported cars would not only need locally made replacement parts but also open greater opportunities for down stream employment in auto and body repair for the imported cars. It's time we said no to blackmail and bullying by the foreign controlled local auto industry .
Shahid Sep 25, 2012 01:25pm
Mr Musharraf Sultan is absolutely right, quality of the locally produced cars is so bad that the components start falling off right from the first day of purchase whereas the imported cars are cheaper and of top quality; time to think for local manufacturers