Mansoor Sadiq

Following the closure of Indus Motors operations in Pakistan, Pak-Suzuki Motors Company Limited also announced to shut down production of cars and motorcycles in the country temporarily, WealthPK reports. Citing the government’s restrictions on importing automobile parts and the resultant shortage of the inventory level as the main reason, the company will stop its operations for five days from January 2 to January 6 in Pakistan.

In a letter sent to the Pakistan Stock Exchange, Pak-Suzuki Motors Company said that the mechanism introduced by the State Bank of Pakistan to get prior approval for import has adversely impacted the clearance of import consignments, affecting the inventory levels. “Therefore, due to a shortage of inventory level, the management of the company has decided to shut down its plant for the automobile as well as a motorcycle for the period from January 2 to January 6, 2023,” it said.

Pak-Suzuki Motors Company has been involved in assembling, manufacturing and making Suzuki motorcars, motorcycles, pickups, and respective auto-spare parts. The auto industry in Pakistan is dependent on imports of automobile assembling parts. Following the restrictions of the State Bank of Pakistan on the opening of Letters of Credit (LCs) on account of the exchange rate crisis, the local auto industry is facing severe difficulties in importing the items required by it.

In the last few weeks, LCs approval for imports was delayed by SBP, which subsequently delayed the production and deliveries of vehicles. Affected by these issues, Indus Motors Company, Millat Tractors and several other automakers shut down their production in the country.

After the new steps taken by the SBP, the local car industry is observing production halts to cope with the ongoing economic and administrative hurdles. Market rumours are also hinting at a mass exodus of car companies if the situation stays volatile. The SBP on May 20, 2022, introduced a mechanism for prior approval of imports under HS Code 8703 category (CKDs), which has severely impacted the clearance of the imported consignment. On account of these issues, leading vehicle assemblers in Pakistan are considering options to halt their production in the country.

On the other hand, several leading manufacturers of motorcycles in Pakistan including Atlas Honda and Yamaha Motor Pakistan Limited have announced an increase in the prices of their respective models of motorbikes. The Pakistan Motorcycles Assemblers Association said that three Japanese bike assemblers in the country increased the prices of motorcycles multiple times on account of the devaluation rupee and shortage of parts. Chinese bike manufacturers in Pakistan are also facing similar challenges due to a reduction in their sales. The rising challenges have also forced them either to halt their operations or shut down their plants, market observers told WealthPK.

Credit : Independent News Pakistan-WealthPk