Note that the company has already been observing Saturday as a holiday for the past two months.
The non-filer issue and the imposition of 10 percent Federal Excise Duty (FED) on Honda Civic which holds a 40pc share in total HACL sales, has resulted in a lot of pressure on the Honda’s sales since January. In the latest budget, the government has levied FED in the range of 2.5 to 7.5 percent on vehicles of a variety of engine power.
Before January, Honda was producing 220 vehicles per day. However, since January, the company has been producing approximately 160 cars per day. This is quite the turnaround for a company that was producing vehicles in double shifts just a year ago.
The automobile industry is suffering under the additional taxes and duties that were introduced in the Budget 2019-20 such as five percent additional customs duty on imported parts in addition to the new FED rates. The change in duties, coupled with the unrelenting rupee devaluation against the dollar, have resulted in massive hikes in car prices.
According to the Pakistan Automotive Manufacturers Association (PAMA), the Honda Civic and City sales in 11MFY19 decreased from 39,869 units to 37,083 units. It is imperative to mention here that while talking to PakWheels.com, a local Honda dealer said that it is untrue that Honda is stopping the production of its cars. The company is only suspending its production for maintenance purposes, not due to any other reason, he added.
We contacted Honda officials to know what they had to say on this matter, but they didn’t respond to our queries.
Furthermore, Indus Motors Company (IMC) was already observing two Saturdays off, and now they have decided not to roll out vehicles for eight days this month, making it a total of ten days off for the company’s production.
The official credited the lacking business activity to customer’s hesitation to purchase vehicles as of late. In the current fiscal year 11MFY19, IMC sold 52,314 units as compared to the 47,866 units in the same period of last year.