Lower output, imported cars dent vendor sector

ISLAMABAD: The automobile vendor industry is facing tough challenges due to low production and a surge in the import of used cars, but the potential growth in the auto sector, driven by new entrants, is expected to provide a boost in the near future.

Auto sector vendors urged the government to ensure policy consistency, stating that the supply and demand crisis in the local auto industry has led to frequent plant shutdowns for original equipment manufacturers (OEMs), negatively impacting vendors overall.

Nabeel Hashmi, chairman of Thermosole Industries (Pvt) Ltd, said that the local vendor industry has been consistently in turmoil due to economic conditions, soaring vehicle prices, and political uncertainty.

“Weak demand, coupled with issues in LCs in the recent past, has had a serious effect on current businesses, while heavy imports of used cars are contributing factors to the industry’s plight,” he said.

At the same time, he added that the local auto industry has started to show signs of recovery after witnessing an average 50 per cent decline for continuous 18 months, which, in turn, will prove beneficial to the vendors’ industry.

“However, the hopes are pinned on the new government for sustainable recovery,” Mr Hashmi added.

As the vendors expressed concerns that their heavy investments into the upgradation of their facilities for overall localisation, which includes procuring machinery and tools to make metal and non-metal parts locally, were being underutilised.

They added that the significant investments in the latest machinery and infrastructure were underutilised, as the plants were currently operating at less than 60-70pc capacity due to low-capacity volumes and supply chain disruptions.

Another vendor stated that from July to January in the current fiscal year FY24, more than 21,874 used cars were imported, whereas in the same time period last year, only 2,990 used cars were imported.

Published in Dawn, March 2nd, 2024