Honda Atlas is observing plant shutdown due to lack of demand of its cars in the market. The company has reduced working days to 11 in the month of September due to rising unsold stocks while it saw 13 working days in August and 20 in July, as reported by Dawn.
According to sources Honda Atlas has unsold stocks exceeding 3,000 units at its plant and various dealership networks across the country. Due to closure of second shift operations, around 1,000 contractual employees have already lost their jobs in the last three months.
Honda Civic and City production and sales have plunged to 3,520 and 2,588 units in July-August 2019 from 8,161 and 8,078 units in same period last year. BR-V production and sales plunged to 538 and 450 units from 959 and 864 units.
According to CEO-Partner of Honda Drive-In and Honda Quaideen, Shabbir Alibhai:
“The meltdown in the auto industry is far more frightening than expected. Since the start of 2019, sales have plunged to 30% of those in 2018.”
He said registration of new vehicles in Karachi hovers between 40-45 units per day versus over 200 units per day last year. Auto loan financing by the banks is at its lowest – hardly 20-25% from the previous years due to shrinking demand and high interest rates, he added.
Insurance companies have also started delaying payments of repairs to work shops from a cycle of 45 days to 90 days. That too, if the financial position is strong enough to sustain the business as the number of insurers has fallen, Shabbir said, adding that low sales will hit government revenues.
He urged the government to seriously look into the issue as more layoffs are expected across the board. The new players are going to be most affected as they have made huge investments.