Pakistani local car manufacturers, despite offering poor build quality and expensive vehicles, are facing production capacity issues. The market is expected to see a surge of vehicles sales in the coming months which is said to cause problems for buyers and car makers.
North of 50,000 vehicles are expected to be sold in the next few months, mainly due to the proposition of an Orange Taxi Scheme which will result in the procurement of most of the new vehicles.
Sources indicate that all three local auto manufacturers, Suzuki, Toyota and Honda, will be working beyond full capacity in order to meet the upcoming, rising demand. Regardless, the three car makers are already having trouble meeting consumer demand and the taxi scheme is only bound to increase maximum capacity constraints for the car makers.
None of the local car manufacturers have any large scale expansion plans in the near future. Delayed investment in the local market is pushing car buyers to go for imported vehicles as the demand and supply gap continues to increase. Car makers are already delaying car shipments by several months even after advance payment.
Honda Atlas has a production capacity of 50,000 cars per year. Considering that it sells around 35,000 to 40,000 Civic and City models each year and that it has other models like the on offer as well, Honda will have a tough time meeting the demand even when utilizing 100 percent of its production capacity.
Similarly, Toyota Indus is already churning out more vehicles than it ever has. It is producing Corolla model at a rate of 65,000 units per year. However, Toyota has a higher maximum capacity of 150,000 units. Until now, it has been producing 130,000 vehicles a year but following the approval of the Orange taxi scheme, the company will be pushing hard to meet the demand of 50,000 new cabs and car shipments could be further delayed by months.
If the supply and demand issue continues to escalate, more consumers will move towards imported Japanese cars. Cars already have high premium rates (own rate), increasing delays will only push these uncontrolled rates even higher on newer models.