Following Honda Atlas Cars Pakistan, Indus Motors Company - the maker of Toyota vehicles -  has decided to shut down all production for the remaining days of September, which brings the total number of “non-production days” (NPDs) up to 15. With the two biggest carmakers in the country slashing production the most visible indicators of a slowing economy are now in place. While many will blame the current government for creating the environment that led to the partial closure of these plants, we must look at the global automotive market and realize that the slowdown is worldwide. Similarly, we must also look at the policies of the local auto industry and realize how they too must be the one to change.

Activity across car producers globally reached a near-record low in August, meanwhile IHS Markit global car industry purchasing managers’ index recorded the sharpest decline in activity of all sectors, and its fourth lowest reading since the data series began in 2009. The global slowdown is being pinned on the uncertainty surrounding the US-China trade war, and whether China will be available as a market for car manufactures in the future.

While Pakistan is relatively sheltered from the US-China trade war, its knock on effects have been felt in the prices of imported parts. Coupled with steep increase in car prices after currency devaluation in Pakistan as well as imposition of Advance Customs Duty (ACD) on all imports and Federal Excise Duty (FED) on assembled cars, buying a car is becoming an outlandish notion for the common man – they are simply too expensive.    

However it is the Pakistani automotive industry that must make the adjustment; for decades they have been selling cars stripped of features at above-average prices due to an import heavy policy – unless local manufacturing is set up, the prices will not return to a reasonable level. In the meanwhile perhaps they can offer heavy discounts to entice customers, as the automotive industry in neighboring India – which is facing the same problems - has already done.