Thousands Laid Off In Auto Industry As Sales Down By 70%

The automotive industry in Pakistan has laid off thousands of workers in the last few months as production and sales of vehicles declined by almost 70%. A report by English news daily revealed that the industry has reached this point due to the ban on the import of raw materials, non-issuance of LCs by the State Bank of Pakistan (SBP), rupee depreciation, and record-high inflation.

The current government banned the import of raw materials last year, leading to a slump in outflow from the car industry and causing layoffs and unemployment. Talking the same newspaper, Pakistan Association Automotive Parts and Accessories (PAPAAM) chairman, Munir Karim Bana, said that the industry has retrenched thousands of workers in recent months as production has virtually stopped. He asserted that there are no buyers as car companies have shut down their plants.

No Hope? 

Bana said that PAAPAM supplied around 90% of local parts of vehicles to car companies. “Our raw material is getting devalued, but there is nobody to listen to our grievances,” he asserted, adding that the income streams are drying up with no production.

The chairman also said that the industry used to be profitable, but now it is bankrupt, and there are hardly any chances of revival in the coming years. Meanwhile, the coordinator to Prime Minister Shahbaz Sharif on commerce and industry, Rana Ihsan Afzal, said that the industry may not reach its full efficiency until the revival of the IMF program. “Unfortunately, the industry has to lay off its workers, but right now, we have to protect our foreign exchange reserves by keeping a check on the import of the raw material,” he said.

Car Sales Down by 85%

The latest PAMA report revealed that car sales have down by 85% on year-on-year bases in April 2023. The report stated that the industry sold only 2,844 units in April ’23 compared to 18,626 vehicles sold in the corresponding period of last year.

Similarly, month-on-month sales witnessed the same trend – decreased by 52% sold 4,463 last month vehicles against 9,351 cars in March. The reason behind this nosedive is the poor sales of Pakistan Suzuki and Honda Atlas the previous month.