Local auto-makers are experiencing higher input costs due to non-availability of metal sheets in the country, according to industry sources here. The immediate impact is seen on the cost of production of cars, which is increasing, as the local original equipment manufacturers (OMEs) are compelled to import metal sheets, mostly from Japan, at higher prices.
These sheets are perforce imported as locally produced metal sheets do not meet the required quality and specifications for manufacturing of cars. Importing any commodity always costs higher than the commodity produced locally and, in the current scenario when the value of Pakistani rupee is rapidly depreciating, it is adding to the woes of the OMEs as their input cost is going up and up, sources said.
Prices of major metals have gone up by 60 percent, on average, from 2009 till May 2011, clearly indicating that the input cost has risen and is causing financial losses to the local auto-makers. Statistics show that during the last couple of years in the international market the rate of steel has increased by 27 percent, from $586 to $746 per ton, while the rates of polypropylene, aluminum, copper and lead increased by 67, 35, 24 and 45 percent respectively.
Besides, the rate of US dollar has increased by 5.19 percent against the rupee from June 2009 till May 2011, while the rupee has depreciated 25.2 percent against Japanese yen during this period, increasing the cost of imported parts, including metal sheets used in locally made vehicles.
Sources aid that metals are the major input in the production of vehicles and they are imported against Japanese yen and US dollar. Local auto industry is not only fighting against the unfavourable policies formulated by the government but is also striving for its survival in the atmosphere where input cost escalates every now and then and squeezes the breathing space for the local auto-makers, they said.
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