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<\/p>\nIt has been seen, since\u00a0past examples, that rupee\u2019s value is extremely uncertain and the current state of foreign exchange and trade shortage have made it especially concerning. Rupee is doubtful enough to lose 3.2% overnight \u2013 which has terrified the biggest commercial troupes in the country.<\/p>\n
Auto part producers have worried over their concerns on this indecision as they too are affected by it. It\u2019s not only the fright of \u201crupee might lose value\u201d bothering them. What they are in fact anxious about is the \u201cuncertainty\u201d as the strength charts can spike in any direction in a really short time.<\/p>\n
Their businesses run on heavy imports and stored inventory. Imports cost more if the strength of the rupee falls and that stored inventory loses its value.<\/p>\n
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\u201cRupee devaluation will affect all auto part manufacturers and their business cycles \u2013 this is a cause for concern,\u201d said Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Chairman Mashood Ali Khan.<\/p>\n
The payable-receivable period of auto vendors is usually very long. Most transactions are high-priced and on credit. Due to the nature of the content being sold, different costs are incurred such as delivery and holding.<\/p>\n
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Auto-makers fear about an anticipated profit on a certain sale might change in the future if the rupee\u2019s value falls.<\/p>\n
\u201cI fear auto companies would hold my payment for a few months in case the rupee depreciates suddenly. This can stretch up to six to eight months,\u201d an auto vendor says.<\/p>\n
An approximation shows that around 50% of the raw material used by auto vendors is imported.<\/p>\n
Former PAAPAM chairman, Munir K. Bana, said:<\/p>\n
\u201cRupee devaluation will hurt auto vendors just like it would hurt any other industry. All we want is that the rupee is allowed to depreciate gradually and not by a huge margin overnight.\u201d<\/em><\/p>\n <\/p>\n Auto industrialists are looking forward to a decrease in the rupee\u2019s value by the government. The predictable decrease is around 10%.<\/p>\n He added,<\/p>\n “Rupee devaluation will certainly make everything expensive, including cars.”<\/em><\/p>\n A few industry officials consider that the requirement \u00a0is inelastic to some extent \u2013 a change in price does not affect the demand of the product significantly \u2013 therefore a 10% change might not affect consumer purchase of cars.<\/p>\n <\/p>\n For the time being we can merely wait and observe what the auto makers do once the Rupee falls. If you remember, the rupee is being artificially inflated with foreign exchange being pumped by the government. The moment the next government comes, in the future ,they will have to face a razor-sharp turn down in Rupee\u2019s value which will be the reason a lot of problems.<\/p>\n","protected":false},"excerpt":{"rendered":" It has been seen, since\u00a0past examples, that rupee\u2019s value is extremely uncertain and the current state of foreign exchange and trade shortage have made it especially concerning. Rupee is doubtful enough to lose 3.2% overnight \u2013 which has terrified the biggest commercial troupes in the country. Auto part producers have worried over their concerns on […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":[],"jnews_post_split":[],"footnotes":""},"categories":[25],"tags":[],"class_list":["post-6913","post","type-post","status-publish","format-standard","hentry","category-general"],"yoast_head":"\n10% Decline Expected<\/h2>\n
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<\/p>\nA Cause for Concern<\/h2>\n
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