Indus Motor to shut down plant for six days in August

Historic low sales force the handbrake move.

KARACHI: Record low sales have compelled Indus Motor Company (IMC) to keep its production plant shut for six days in August, according to an official.

IMC wants to boost its sales that were at a historical low in July. IMC officials say the slow sales are directly attributed to the low economic activities in Ramazan and huge influx of imported used cars in local market.

IMC officials believe that buyers are holding back money, which has resulted in subdued demand of new cars in recent weeks.

IMC suspended its production for four days in July to offset the slow demand.

With subdued demand and less production days in July, monthly sales of locally produced cars is expected to decline by 30 to 40 percent if compared to June 2012, according to a Topline Securities research note.

The low sales numbers are primarily expected because of completion of Punjab taxi scheme, prompt buying by dealers before price hike in June causing inventory pile up in the market and reduced price differential between local and imported completely build units, adds the note.

Topline Securities estimates that the local industry sales may decline by 30-40% on a monthly basis during July compared with 16,310 units in June 2012 with Pak Suzuki Motor Company (PSMC) receiving the largest hit.

Company wise break-up reveals that Pak Suzuki sale is expected to decline by 45% to 50% to 5,700 to 6,200 units in July from 11,000 units in June.

On the other hand, Indus Motor sales are expected to decline 25% to 30% to 3,900 to 4,100 units in July compared with 5,500 in June 2012.

This is estimated to decline by 31% to 62,000 units in the second half of 2012 because of no taxi scheme and short-term effect on the ban of company fitted CNG kits and its import.

Published in The Express Tribune, August 8^th, 2012.