As Pakistan faces an economic crisis, the local automobile industry appears to be in a turbulent period marked by depreciation of the rupee against the US dollar, economic instability, non-issuance of Letters of Credit (LC) by the State Bank of Pakistan (SBP), and political uncertainty, among other things.
With no CKD kits in hand, the companies are cancelling bookings and halting production to observe non-production days, resulting in further delays in deliveries, while still advertising large price increases that will apply to new orders once production (assembly) resumes.
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During a recent Public Accounts Committee (PAC) hearing, the local auto sector was the topic of discussion. During the discussion, the PAC was informed that customers had placed Rs. 189 billion as an advance payment to ten vehicle businesses.
Public Accounts Committee (PAC) was informed that Rs. 189 billion deposited by Pakistani customers as advance payment to 10 car companies
Toyota Rs.99bn
Pak Suzuki Rs.35bn
Honda Rs.22bn
Changan Rs.11bn
Kia Rs.10.6bn
Hyundai Rs.6.9bn
Proton Rs.1.7bn
Nissan Rs.1.6bn
Others Rs. 1bn— Khurram Afzal Malik (@khurramamalik) July 28, 2022
An carmaker also informed PAC that the government had asked the assemblers why they were taking so many reservations from customers if they couldn’t deliver the vehicles on schedule.
Even before the State Bank implemented import restrictions, delivery times for locally made cars ranged from 3 to 14 months, depending on the model and assembler. However, with such a large sum of money gathered in advance bookings, the assemblers must simplify their operations and ensure they have enough supply to deliver the vehicles to clients on time. Except for the Big Three, most players’ annual production is less than 25,000 units, which needs be increased to fulfil demand.
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