Islamabad: The acute dearth of foreign exchange reserves in Pakistan is forcing the automobile companies to resort to shut downs, reflecting the worsening crisis in the country.
The latest forex reserves of Pakistan stood at mere 3.08 billion US dollars as of January 27, just enough for imports of about 3 weeks and the amount would have further eroded over these days, creating immense difficulties for import-based businesses in the country.
In view of this situation, Pak Suzuki Motor Company (PSMC), one of the country’s largest car manufacturers, today announced that it is shutting down its automobile plant for 5 days from February 13.
The reason it cited was inventory shortage as banks were still reluctant to open letters of credit (LCs) given the ongoing dollar crunch, according to a media report.
In a letter to the Pakistan Stock Exchange, the company mentioned that “due to continued shortage of inventory level, the management of the company has decided to shut-down automobile plant from February 13, 2023 to February 17, 2023,” according to Geo News.
It is the fourth announcement by the company of putting the brakes on its production activities in 2023 — first from January 2 to January 6, then from January 9 to January 13, and later on from January 16 to January 20.
The latest development comes after the company raised the rates of its various car models by up to Rs 3,55,000 last month owing to an increase in the production cost — due to the rupee’s slump versus the dollar, the report said.
Also read: Pakistan on verge of economic collapse: Oil industry on brink, Forex lowest, Re weakest
Passenger car sales plunged 44% in December from a year earlier, dropping to 13,768 units, against 24,471 units recorded in December 2021, as per data released by Pakistan Automotive Manufacturers Association (PAMA).
Pak Suzuki had reported a decline of 8% month-on-month to 11,342 units, it added.
PSMC is engaged in the assembling, progressive manufacturing, and marketing of Suzuki cars, pickups, vans, 4x4s, motorcycles, and related spare parts.
Earlier, Indus Motor Company (IMC), the maker of Toyota vehicles, had also announced complete shut down of its production plant in Pakistan from February 1 to 14, citing “insufficient inventory levels”.
In a letter to the PSX, the IMC management said that in light of the recently introduced mechanism vide EPD Circular No. 20 of 2022 dated December 27, 2022 (effective from January 2), commercial banks were advised to prioritise/facilitate the imports to specified sectors only, which did not include auto.
“The company and its vendors continue to face major hurdles in import of raw materials and receiving clearance for their consignments from commercial banks,” the notice read.
Even from February 15, the company will restart its production on a “single shift” basis until further notice.
