The auto industry is facing mass lay offs in the face of the current financial crunch, and may be looking at losing 10-15 percent of direct jobs over the course of the next few months. Declining sales because of rapid depreciation of the rupee, imposition of federal excise duty in the range of 2.5-7.5pc, and tough economic climate have affected overall sales. Auto sales have declined by 7pc in the last financial year with experts fearing the market to shrink further by 15-20pc during the ongoing fiscal year.
The warning signs first began to show when the country’s two major manufacturers of 1300cc cars, Honda and Toyota, both significantly scaled back their production to first do away with currently existing inventory. According to a Honda Atlas executive, while the sales have picked up a little recently, they still remain at an all time low in recent years.
Honda Atlas has kept its plant closed for 12 days during July as inventories piled up amid faltering sales. Indus Motors Company also cut down its production of Toyota cars to five days a week, whereas Pak Suzuki Motor Company (PSMC), which virtually controls the entire domestic market share of cars with engine size of up to 1,000CC, has announced that it does not plan on scaling down its production.