Crisis in automobile sector has worsened. Pakistan Suzuki Motor Company has accrued losses of Rs.2.92 billion till December, 2019 because of increase in finance cost; expensive imported completely knock-down and semi-knockdown kits and other major component due currency depreciation of over 30 percent, declining sales and overall slowdown of the economy. Other Motor Companies are yet to announce their losses caused to them by these factors.
Sharp increase in the prices of small cars has greatly depressed their sales. According to data released by All Pakistan Automotive Manufacturers Association, sale of 1000 CC cars has dropped to 15,657 units during the period from July 2019 to February 2020 against the production of 16,163 cars. The steep fall in the sale of cars and trucks had led to the closure of vendors’ industry that produces small auto-parts for cars’ assembling plants. It has resulted in layoff of 40000 thousand daily wage workers.
The downturn in the sale of cars and trucks has deterred Nissan Motors Company of Japan to set up a manufacturing plant for localisation of 60 percent auto components and parts. Recent minor cut in the interest rate by the SBP in monetary policy will not reduce the finance cost and once again weakening rupee against the US dollar and other major global currencies will prolong the slump in auto-mobile industry.
