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Higher Taxes: Honda, Toyota Opt For Production Cuts Through Plant Closure Amid Alarming Drop In Sales

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Alarming drop in car sales thanks to devaluation as well as imposition of new and higher taxes forced Honda Atlas Cars Pakistan (HACP) and Indus Motor Company – producer of Toyota – to shut down its plant for 10 days on Friday, with its inventories piling up to 2,000 units.

Also read: Increase In Cars Prices By Honda: Consumers Question Silence And Role of Govt

According to details, the HACP closed its plant for 10 days from Friday, while the IMC will stop production for eight days, two days every week, during this month.

A report published in DAWN says Honda had kept its plant closed for two days earlier last week. However, a Pakistan Suzuki Motor Company spokesman said they will decide whether or not to cut down production in the next few days after analysing sales trend and flow of booking orders during the present month.

“Our inventories from the last month and the first 10 days of July have grown rapidly because of steep increase in car prices after currency devaluation as well as imposition of Advance Customs Duty (ACD) on all our imports and Federal Excise Duty (FED) on assembled cars, leaving us with no option but to shut down the plant to cut production,” a senior official of HACP told DAWN.

“If the present trend holds, we expect our sales to drop to less than 30,000 units this business year (April 2019-March 2020) from over 48,000 units last year.”

Similarly, an IMC official noted “piling up inventories” and said the production cuts could increase next month if sales do not pick up.

Overall, car and LCV (light commercial vehicle) sales plunged by 7 per cent during the last fiscal year to 240,335 units from the previous year. And industry sources are expecting a significantly large dip in sales at the end of the year against the earlier expectations of increasing the sales to half a million units by 2022.

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