The Pakistani has come under increasing downward pressure against major international counterparts, driving up input costs substantially over the last two years. This trend has caused considerable worry among manufacturers, besides negatively impacting the country’s economic stability. Auto industry sources said the local Original Equipment Manufacturers (OEMs), who contribute at least three per cent to the national kitty, are feeling the maximum heat of rupee devaluation.
Although the OEMs have achieved up-to 60 per cent localisation, they have to import critical engine and transmission parts along-with other parts from Japan, and the substantial decline of Pak rupee against Japanese yen and US dollar has caused severe financial challenges for the local OEMs as they are barley absorbing the sky-rocketing input cost.
Sharing the statistics, the sources said the rate of US dollar has increased by 5.8 per cent against the rupee from June 2009 till June 2011 while the rupee has depreciated 27.1 per cent against Japanese yen during the same period, increasing the cost of imported parts used in locally made vehicles.
Commenting on hike in prices of other input cost, the source said during last two years the rates of natural gas have increased by 12.6 per cent, electricity by 30 per cent, diesel by 66 per cent and petrol by 57 per cent. He said in the international market during the same period the rate of steel has increased by 52 per cent from $578 to $881 per ton, while the rates of nickel, aluminum, copper and lead have increased by 49, 48, 80 and 50 per cent respectively.
They urged the government to control rapidly depleting value of PKR against major currencies, otherwise the industrial base of the country will not withstand increasing input costs, which could result into a severe blow to the industrial base of the country.
