Automobile industry crisis deepens

The downturn of automobile industry, mostly comprising vehicle assembly units, had started 10 months ago due to fast declining sales, high bank credit cost, expensive imports of completely knockdown and semi knockdown kits as result of currency depreciation and above all irrational rates of turnover and withholding taxes. The lockdown imposed in the wake of coronavirus pandemic worked as proverbial ‘the last straw on camel’s back.’ The industry has recorded zero sales in the month of April, according to the latest data released by Pakistan’s Automotive Manufacturers Association. The production lines of Honda, Indus Motors, Pak-Suzuki Company and Altas Motors are closed.

Automobile Industry is the second sector of large scale manufacturing after textiles that provide sufficient employment opportunities. Textile industry has been allowed to resume production activities along with businesses of textile products. Automobile industry should also be allowed to restart production activities in addition to approving liberal fiscal and monetary incentives. It is the regressive regimes of taxation and duties that West European and South Korean automobile companies are shy of investment in setting up cars, jeeps and heavy duty trucks manufacturing plants in Pakistan and the industry is stuck in assembling stage, barring 30 percent deletion ratio of local parts.