Honda Atlas Cars Pakistan (HACP) has reportedly closed its production plant for ten days.
The decision was taken on Friday after Honda’s inventories piled up to 2,000 units due to a sharp dip in car sales following the price hike.
The company had blamed higher taxes and unstable currency for the three consecutive price hikes in the last two months.
However, the decision hasn’t helped as the inflation-ridden masses are anything but ready to buy cars.
According to unconfirmed reports, Indus Motors Company (IMC) – the producers of Toyota models in Pakistan – have also decided to follow suit.
A leading English Daily has quoted IMC sources, saying that the company has decided to close down the manufacturing plant for eight days – two days every week – this month. They also cited poor car sales for decreasing production.
Pak Suzuki, on the other hand, was still indecisive whether or not to reduce car manufacturing in the present scenario, the newspaper said.
According to its report, the spokesperson of Pak Suzuki said that the company would decide in the next couple of days after analyzing sales trends and booking orders.
Both Honda and Toyota sources maintained that the sales of their units during the first ten months of the new fiscal year were extremely disappointing, which prompted them to slow down the production as inventories were piling up.
“The currency devaluation and imposition of Advance Customs Duty (ACD) on all our imports and Federal Excise Duty (FED) on assembled cars, left us with no option but to shut down the plant to cut production. 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,” a senior executive of HACP said.
The IMC official also gave similar remarks.
“[We are] observing eight no-production days this month. It is a dire situation for the local car manufacturers who are piling up inventories,” he said without mentioning the size of inventory.