Karachi: The unabated surge in input costs of different commodities is mounting pressure on manufacturing sector to push up the prices of their products in coming days.
The worst hit of them all is auto manufacturing sector as it is under pressure from foreign currency appreciation, utility prices as well as from the vendors’ side who are feeling similar heat.
Sources in auto sector said that the local automobile makers are likely to pass on some of the impact of rising cost of production to customers with slight surge in the prices of cars and light commercial vehicles.
The inflated petroleum prices, hike in electricity tariff and soaring expense on imported CKD kits compounded the huge burden upon automobile makers on the account of additional production cost, unbearable for them to adjust in their routine operational expenses.
According to data, a steep hike witnessed in vendors’ cost on producing spare parts by 4.7 percent and more hikes is expected in the cost after fresh increase in petroleum products prices by Rs 5-6 per liter on diesel and petrol.
The petrol and diesel prices were recently increased by 15.8 percent and 8.9 percent per liter in the period Jul-Dec 2011.
Similarly, the prices saw increase on various raw materials including plastic, paints and light engineering products. In addition, the transportation costs were inevitable to go up for the supplies of these raw materials to automobile makers.
The imported CKD parts are up by 3 percent in past three month on the disparity of rupee against US Dollar by 2.5 percent and 5 percent on Japanese Yen.
Moreover, industry is forced to use expensive diesel for power generation in the absence of KESC & gas load shedding. Government has already announced a 3 percent increase in electricity tariff in the past couple of months which is adding up to the woes of industry.
Sources in the sector said that the automobile makers have already absorbed the increase in aggregated production cost, thanks to localization of automobile sector; otherwise, the cost would have increased more on different brands of cars.
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