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January 22, 2019

‘Car sales curbs putting auto industry growth in reverse gear’

Business

January 22, 2019

KARACHI: Restriction on the sales of cars to non-filers is hurting automotive industry as well as subsectors like auto-parts makers to a great deal, putting brakes on its growth as well its contribution to the national economy, an official said on Monday.

“It was in the interest of the car manufacturers to have maximum parts made locally and for last 30 years OEMs (original equipment manufacturers) have come a long way to establish vendor and engineering base in Pakistan,” Ali Asghar Jamali, Chief Executive Officer of Indus Motor Company (IMC), said in a statement.

He said that full potential of job creation can only happen if these engineering companies supplying parts to original equipment manufacturers (OEMs) are encouraged and supported as it has proven to be the real engine of growth in auto sector.

“In developed countries with strong vendor base, one job created at OEMs results in multiplier effect of 10 more jobs across the value chain,” Jamali said.

He added that in developed economies of Europme, around 13.3 million Europeans, or 6.1 percent of the European Union (EU) employed population, worked in the automotive sector.

“The turnover generated by the automotive sector represents 6.8 percent of EU’s GDP. In Germany alone, every seventh job is "directly or indirectly" linked to the sector and contributes around 14 percent of German GDP,” he said.

Jamlai said Pakistan had a huge potential too and once tapped, the auto sector would prove to be the launchpad for an economic turnaround of the country. “With an environment conducive to the auto industry, it can provide high-tech engineering base not only for itself but also for all other engineering sectors,” he added.

“At one hand the industry contributes heavily to employment generation and local industry development and on the other it also saves the carmakers from avoiding longer lead time for the arrangement of parts and hassle of cumbersome procedures of import and maintaining high inventories, while facing the full brunt of rupee devaluation.”

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