Business & Economy

Auto industry optimistic about next quarter, cancels non-production days

LAHORE           –         Expressing hope of coming out of prevailing slowdown and revival of business in next quarter, auto manufacturers have cancelled earlier planned Non Production Days (NPDs) to cope with demand of vehicles. Although slowdown in the auto sector has resulted in almost 60% drop in sales but the outlook for the coming quarter seems promising, said Ali Asghar Jamali, Chief Executive Officer Indus Motor Company (IMC).

“Last five months were very tough due to rupee depreciation; reduction in car financing, increase in Federal Excise Duties (FED) and higher input costs. But we are witnessing signs of improvement and, for this reason, Non Production Days planned in November have been cancelled,” he said. The auto industry appreciates the government’s efforts to expand the tax net and documentation, he said. “But there should be a way leading to a win-win situation. This means there should be no harm to the industry and people should be encouraged to become filers,” Jamali said.

“More than 50% of sales were coming from non-filers previously, which has been impacted lately,” he said. He said the top contributors challenging the industry include rupee depreciation, increase in duties, and decrease in demand owing to lower purchasing power. He added that the road to revival of the auto industry is to stick to the auto policy so that the auto sector can do its best to help the national economy.

“Adhoc decisions create unpredictability and uncertainty which is bad for the industry and investments,” reasoned Jamali. He said that ‘Make in Pakistan” approach is needed to boost the economy and the auto sector can play a pivotal role in this regard.

“The government has shown its commitment to promoting ‘Make in Pakistan.’ In the last meeting with the Engineering Development Board, focusing on production of Electric Vehicles in Pakistan rather than promoting their imports was discussed,” he said, adding, the Policy on electric vehicle should include import of EV and HEV specific parts only at concessionary duties so manufacturing is encouraged instead of allowing duty-free imports of EV. Government support is required to promote CKD operation and discourage CBU imports. Commenting on the recent news allowing expats to import duty-free 3000cc hybrid cars, he said that government should incentivize them to buy locally made cars duty-free. “We have to prefer manufacturing over trade to boost the economy, create jobs and increase exports,” he added.

Government should look into restricting the import of used cars; which is quite damaging to the environment, local auto sector, and the national economy. Government should support in promoting localization which will ultimately lead to employment opportunities, transfer of technology and open doors to export.

For oversees Pakistanis government can offer incentive on taxation and duties to promote the flow of remittances into the country. The auto industry is home to 2.5 million direct and indirect labour and the government has to ensure that investment and localization achieved by the auto industry for the past many decades should be safeguarded so that existing players and new entrants are motivated to invest more. Hence, he added, the current situation requires that the government and policymakers should not digress from their commitment to promote the local industry.

 

Article source: https://nation.com.pk/11-Dec-2019/auto-industry-optimistic-about-next-quarter-cancels-non-production-days

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