KARACHI: Pak Suzuki Motor Company Limited (PSMC), one of the largest car manufacturers in the nation, has decided to keep its plant closed until January 13, blaming inventory shortages for the decision.
In a Friday announcement to the Pakistan Stock Exchange (PSX), the PSMC stated, “Due to the continued shortage of inventory level, the management of the company has decided to extend the shutdown of the automobile plant from January 9, 2023, to January 13, 2023.”
It also stated that the motorcycle plant would continue to operate.
The company’s automobile and motorcycle manufacturing facilities were previously closed from January 2 to January 6.
Last week, a PSMC spokesperson stated that the company was in a critical situation as a result of import restrictions and that there was no indication of how long the issues would persist.
He stated, “Detention, demurrages, and kibor+3 percent are really hurting our industry.”
The spokesperson stated that decreased production and sales also disturbed vendors and dealerships. He requested that the government hold a meeting with the business to resolve the issue as soon as possible.
The Pakistani auto industry is reliant on imports, so import restrictions imposed by the government have caught it in the middle of a crisis.
According to the Pakistan Automotive Manufacturers Association (PAMA), passenger car sales decreased by 39% in the first five months of the fiscal year 2023 to 55,144 units, compared to 90,303 units sold during the same time period last year.
It added that, with the exception of Suzuki’s Alto, sales of all other models of cars, trucks, buses, tractors, jeeps, pick-ups, three-wheelers, and two-wheelers decreased in November 2022 compared to November 2021.
In recent months, a number of businesses have announced production shutdowns.
For the third time in 2022, Indus Motor Company (IMC) announced a 10-day plant shutdown due to “hurdles in import and clearance of consignments” last month.
The management of the IMC mentioned that the central bank had developed a method for obtaining prior approval for the import of passenger car kits and parts that have been completely stripped down for the auto industry.
The IMC stated that “[t]he delay in aforementioned approvals for the company and its vendors has created obstacles in the import and clearance of consignments for raw materials and components of the company.”
Last week, auto parts manufacturer Baluchistan Wheels Limited also announced the closure of a plant due to low demand.
Millat Tractors also shut down the factory earlier this week until further notice due to a lack of demand and cash.
In the face of rapidly diminishing foreign reserves, a weakening currency, and a widening current account deficit, the government took action to reduce imports. This has had a cascading effect on industries that rely on imports to complete finished goods.
