Pakistan Auto Industry hits with severe crisis

Pakistan Auto Industry hits with severe crisis

KARACHI: Pakistan Association of Automobile Parts and Accessories Manufacturer (PAAPAM) Chairman Mohammad Akram has said that car vendors have shown the door to thousands of daily wage workers, outsourced employees and contractual workers from July until date following massive decline in sales in the overall auto sector.

PAAPAM chairman said that he had received feedback from the association’s 400 members across the country regarding layoffs of around 40,000 people in view of the steep fall in parts procurement by the car and other auto assemblers after massive sales drop. He made these remarks in an interview with *Dawn*.

“I see more joblessness in case the sales slowdown continues in the next two to three months,” Akram feared while adding that the axe may also fall on permanent workers in the next phase of layoffs. He said the 1QFY20 had already ended in red for the entire auto sector while sales are likely to remain depressed until December.

On rising vehicle prices — especially cars, he cited low localisation in vehicles as one of the main reasons. “What assemblers claim of achieving high localisation is wrong, I can prove it,” he said while adding that higher localisation would definitely have averted frequent increase in prices of cars on falling rupee against the dollar.

In the interview Akram also complained that assemblers have been persistently increasing vehicle prices but they hesitate in passing on price increase to vendors for parts procurement.

Only last week, Indus Motor Company (IMC) — the maker of Toyota vehicles — had announced that there will be no layoffs of employees despite slowdown in production. The IMC resumed auto production at 50 per cent capacity from Oct 1 after shutting down plant for last 15 days of September.