Unfortunately the fiscal year 2019-2020 is unlucky for the local auto industry. At the start of this year, the new government PTI banned the import of vehicles for local dealers for the purpose to promote the local auto industry. It was a good chance for auto manufacturers to prove their sales in the local market and enhance the sale volume. But in the Finance Budget 2019-2020 government imposed the Federal Excise Duty (FED) on all vehicles. After these auto manufacturers increase the prices of vehicles.
Rupee Devaluation Effects:
Currently, the dollar rate is not stable at one point the price of the dollar against the rupee is too high. As a result of the customs duty is increased and auto manufacturers pay high duties on the import of vehicles parts. After the FED and high custom the cost of products high and not in range with old prices of cars. After the devaluation of rupee value, the automakers pay a high amount for customs clearance. For the under developing countries, the instability of the dollar rate is not good for the economy and have a bad impact on the import. The rupee depreciation is not only hit the auto sector its also impact the economical condition and a reason for inflation in the country. Our economy highly depends on the import even the auto manufacturers import vehicle parts from the other countries.
Auto Sector Affected By Rupee Devaluation:
The auto industry of Pakistan is one of the fastest-growing sectors and contributes a high part in the economy. But from the last couple of months, the auto sector is continuously suffering a loss and as compared to the previous year the sales of the vehicle is almost declined by 41%. Toyota IMC, Honda Atlas, and Pak Suzuki are the top-line car manufacturers of Pakistan and all of them are suffering a loss. Recently Honda and Toyota closed their production plants for a few days. According to the details, companies said the decline in demand is a reason for closed production plants. There are already thousands of vehicles stand in the plant that are unsold.
PAK Suzuki is famous in the local market for producing a small vehicle with an economical range but in the last month, the company closed its several cars booking just because of the decline in demand. At the start of this year, PAK Suzuki launched the new Alto 660cc to attract its consumers and this time only the Alto is selling at a high priority. Suzuki Wagon R is the top-selling car in the last year 2018 and the company sold at a high-profit rate.
Final Words:
At last, this is a very tough and challenging time for the auto sector the sales are not recovered. Cars manufacturers introduce a new vehicle to attract the consumer and recover the loss but on the one side the high rates of cars and the other side high inflation rate decrease the consumer purchasing power. If the rupee stands in a good position automaker can increase their sales. The improvement of the auto sector is very important for our economy after this there are no possibilities for the economy to make a batter position at the international level.
What should the government do for auto manufacturers to increase the sale? Comment your suggestions.
Stay connected with Auto Deals for more updates and news about Auto Industry.
