Automotive industry sales in Pakistan may see a decline of around 40-60percent in the fiscal year 2019-20. According to the industrial forecast of Pakistan, nearly 150,000 people will become jobless.
Earlier, the automotive industry had projected a boost in its sales to 0.3 million near 2021 and half a million units till 2022. However, alterations in the tax policy, new taxes with a rising input value and an irregular rush in rupee-dollar congruity enhanced the car prices.
Industry sales plummeted against its prediction for the last 3 months. Likewise, the car and LCV sales plunged by seven percent throughout the last fiscal to 240,335 units. There has also been a severe cut in tractor manufacturing in Pakistan. Moreover, the prices are constantly increasing, making the auto-mobile sector more vulnerable than ever.
In the yesteryears, the automotive sector was one of the best performing sectors in Pakistan. Now, the sector is going through a gloomy scenario. The industry sector needs to make significant changes in the manufacturing strategy in order to ameliorate the sector. Besides, the current bleak scenarios of automobile sector would make 100,000 to 150,000 jobless in the coming time.
As a leading pointer, the extension of the auto sector exhibits growth of the entire economy. Point to ponder, many in Pakistan believe the decline in automobile sector is the result overall economic crises of Pakistan.
Additionally, the main contributory factors in the anomalous decline in cars businesses are extensive duties and taxes and tremendous energy and interest rates.
The automotive industry cannot endure the immense result of five percent Advance Customs Duty (ACD) on all raw supplies. In addition, the encumbrance of 2.5-7.5 percent Federal Excise Duty (FED) makes things more difficult. The taxes have severely hit buying and pushed important people of the automotive industry to prevent the production
Increase in material cost accelerated car prices and consequently reduced sales. This forced Honda Atlas to close its factory for ten days with accumulated lists of 2,000 units. Likewise, Indus Motor Company is also planning to slow down its production.
Besides, Pakistan Suzuki Motor Company is going to make its decision in slowing the production after analyzing certain dynamics.
A worker, working in a leading automotive company said that the government better reverse its decision of new taxes otherwise the things will become worse. People working in the automotive sector are quite afraid. They think they will eventually lose their jobs. The policy of taxes is more adversely affecting the middle class of Pakistan.
The Pakistani Pakistan automotive manufactures association may protest regarding the current hike in taxes. Furthermore, the crises of the automotive industry are not solely based on new taxes. The ever-rising prices of dollars and devaluation of rupee along with soaring petrol prices are significantly affecting the automotive sector.
Government needs to ponder upon the ongoing automotive industrial disasters on war-footings. Otherwise, the automotive industry, which once was the best performer in Pakistan, would end up as the worst one. Hopefully, the visit of Imran Khan to the US will pave way for the stable economy of Pakistan.