Mansoor Sadiq

Pakistan’s leading manufactures of tractors, Millat Tractors Limited and Indus Motor Company (IMC), the largest assembler of Toyota automobiles in the country, have announced to halt their production temporarily amidst the reduced demand and import issues. Following the rage of flash floods across the country during September 2022, tractors’ demand witnessed a decline from September to November, and Millat Tractors Limited (MLT) announced closure of production particularly on Fridays. In this regard, MLT has also intimated Pakistan Stock Exchange (PSX) through a letter stating that the company will observe Fridays from December 23 as non-production days till further notice from MLT.

In a similar move, IMC citing its challenges relating approval of imports, announced on December 20 to completely shut down its production plant from December 20 to December 30, and also shared the closure information with PSX on December 19, 2022. The State Bank of Pakistan (SBP) issued a circular in May 2022 urging all manufacturers to obtain prior approval for imports of completely knocked down (CKD) kits and components of vehicles for the automobile sector.

Director of Indus Motors Imran Ali Habib said while talking to WealthPK that the lengthy procedure to import components of vehicles and subsequent clearance of consignments impacted adversely the supply chain and production activities. “And amidst this impasse and delayed mechanism, the IMC finds it unable to continue operations, and halted the production initially for 10 days,” he said.

Pakistan Automotive Manufacturers Association (PAMA) said Pakistan’s auto industry is facing challenges of rising production cost following the rupee depreciation. It said that the auto sector of Pakistan comprises only 3% of total import bill of the country, and urged the government to remove import restrictions.

On the other side, MTL witnessed a record reduction of 75% on a monthly basis and 72% on a yearly basis following the floods all over the country during September. Vast areas in rural Sindh are still under water and following increase in inflation ratio, reduction in tractors demand has compelled MLT to restrict production.

As per the report of PAMA published on December 15, sales of all the variants of cars, SUVs, jeeps, pick-ups as well as two-wheelers witnessed a decline during November 2022 compared to November 2021. The report also pointed out that the motorcycles sales ratio also reduced in the country for the first time after 2002, and the major reason was cited as rising inflation and flash floods, as 34 million people were severely affected by floods and agriculture productivity declined after inundation.

Credit : Independent News Pakistan-WealthPk