Auto parts makers seek 10% net profit

Speakers at a seminar organised by the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) questioned the original equipment manufacturers (OEMs) over their failure to give the “due share to the vending industry”.

While demanding justified price indexing amid frequently increasing costs of inputs, they asked the OEMs to pass on at least 10% of net profit to the vendors, besides re-evaluating all frozen cost variables.

They explained that the frozen cost variables had hurt the operation of the industry as fixed costs became variable in the long run due to variations in the cost of materials, rising energy tariffs, high labour cost, highest-ever interest rates and regular rupee devaluation against the dollar.

Paapam Chairman Abdur Razzaq Gauhar said high inflation had reduced the vendors’ contractual capacity and robbed them off profitability. “There should be mutual arrangements between the OEMs and the vending industry to settle the long-standing issues among them.”

“Vendors should take every possible measure to control the internal cost to break the prevailing impasse. Otherwise, it can lead to the closure of the industry’s operations nationwide.”

The forum unanimously decided to ensure at least 10% profit margins based on all cost elements from the OEMs, unfreezing the fixed cost headings, indexing variables after the increase of every 2%, and ensure payment within 15 days to save the auto parts vendors and the industry.

Published in The Express Tribune, July 5^th, 2022.

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