KARACHI: Pak Suzuki Motor Co. Ltd. (PSMC) announced another two-week shutdown at its vehicle and bike operations due to inventory shortages.
The Pakistan Stock Exchange received a company statement.
“Due to inventory shortage, the management of the company has decided to shut down motorcycle and automobile plant. It will be from June 22, 2023 to July 8, 2023,” the warning read.
Pakistan’s low foreign exchange reserves have made it difficult for auto importers to secure letters of credit (LCs).
The State Bank of Pakistan’s $4 billion foreign reserves can only fund a month’s imports.
A year-long raw material shortfall has afflicted the organisation. PSMC closed its bike plant May 23–June 16. The auto plant shuttered at the start of the month too. Indus Motor Company has also notified many import restriction shutdowns.
Car sales in Pakistan have plummeted in a year due to a recession and high inflation.
Pakistan Automotive Manufacturers Association reported 80% year-over-year car sales decline in May 2023. 92,554 units sold in the first 11 months of FY23, down 56% from 210,633 in FY22.
However, PSMC’s monthly sales rose 101% to 2,958 units in May 2023, led by Alto (+132%), Swift (+129%), and Cultus (+59%).
Topline Securities analyst Sunny Kumar attributed the large increase to the low base and availability of CKD (completely knocked down) parts.
Pakistani companies’ repeated production shutdowns have caused enormous layoffs. The Pakistan Association of Automotive Parts and Accessories Manufacturers reported that 25,000–30,000 auto workers had lost their jobs due to a continuing sales decline.
According to the latest Overseas Investors Chamber of Commerce and Industry survey, business confidence in the country dropped 21 percentage points to -25% in March-April from -4% in September-October 2022 as the government struggles to secure an IMF deal before the current bailout programme expires on June 30.
