Disruptions, low volumes hit auto part makers

The auto industry is facing a severe setback as the investments made are taking a hit due to supply chain disruptions and weak demand. Despite significant investments in the latest machinery and infrastructure, the underutilisation of resources is becoming a growing concern for the industry. “Our efficiency got affected due to current economic conditions as vendors’ current capacity utilisation is between 60 to 70pc,” said Haroon Arshad, Chief Executive Officer, Ravi Autos Sundar (Pvt) Ltd while talking to journalists during their visit to vendor manufacturing plants in Lahore. He added that the current economic situation has impacted the vendor industry at every level due to weak demand, LCs issues, and its effect on current businesses. Mr Arshad said that total car sales clocked in at 26,988 units for the initial four months of the current fiscal year, down 44pc from 48,573 units in the same period last year. “This is the trickle-down effect and aftermath of frequent plant shutdowns on numerous issues including the opening of letters of credit (LCs), depressed automobile demand due to the shrinking economy and soaring prices of vehicles, high auto financing due to unbearable interest rate hikes, and rising petroleum prices,” reasoned Mr Arshad.