Bike assemblers delaying payments to vendors

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 Bike assemblers delaying payments to vendorsLahore: When the industry is already under financial burden due to liquidity crunch amidst adverse policies, lack of export incentives, non-availability of credit and absence of utility services, the motorbike assemblers have started to delay payments to the auto parts vendors.

Expressing serious concern, auto parts SMEs, mostly located in Punjab, complained that unpaid invoices of vendor companies by the motorcycle assemblers of 70CC Chinese version are continued to escalate.


They said that the Engineering Development Board of Pakistan issued these assemblers licenses of motorcycles manufacturer in Pakistan and auto parts companies generally consider EDB’s certification as credible to supply components to them on credit.
They complained that the situation is now getting serious when motorcycle assemblers have started to either delay payments or straight away default, leaving parts manufacturers with no recourse.

Convener of the Two-Wheeler Standing Committee, Iftikhar Ahmed, said the parts industry is presently unable to meet its working capital requirement due to exceptional hike in Rupee-Dollar parity, which is ultimately increasing cost of doing business particularly in Punjab where number of industries is squeezing. “In-fact, almost 90% of funds are being used by the assemblers for their operations actually belong to the vendors who are now facing immense problems due to this dishonesty,” Iftikhar observed.
He complained of negative treatment and non serious attitude of a number of assemblers who have made it a practice to default on payments of one supplier and then shift to another one.

Different parts makers, requesting that their names should not be mentioned, said that the OEMs gets parts from vendors, assemble their bikes, sell it in the market, enjoys the profit but do not consider paying their bills on time.

They claimed that a number of auto parts SME’s have closed their business due to non-payment and their owners are running from pillar to post for recovery.
Pakistan Association of Automotive Parts & Accessories Manufacturers Chairman, Munir Bana and vice chairman Usman Malik, observed that small parts manufacturers go to extreme efforts to arrange funds for their companies, as the banks do not lend to them easily. “It is the hard earned money of these small entrepreneurs that is misused by the motorcycle manufacturers in their own running operations. This practice must stop immediately”

They stated that this attitude of the Chinese Pakistani brand companies is very bad. Though one or two brands have made improvements in their payments yet many still continue to exploit the small parts makers.


Courtesy: The Nation

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