The Suzuki Motor Company Ltd (PSMC) has pulled the plug on its car and bike plants in Pakistan. As per media reports, the plants will remain closed from June 22 to July 8 due to import restrictions and their effect on components and accessories. The Japanese car giant’s action comes just one week after it resumed operations at its Pakistani four-wheeler factory, which had been closed for more than 75 days, it said.
As per regulatory filing to the stock exchange, it said that it has suspended manufacturing due to a shortage of parts and accessories brought on by a system the country’s central bank adopted in May last year
In May last year, the State Bank of Pakistan (SBP) ordered businesses to obtain prior approval before importing fully knocked-down kits, which had a negative impact on clearance of consignments and therefore affecting inventory levels.
The ongoing shortage of raw materials has plagued the company for a year as the PSMC kept its four-wheeler plant shut for over 75 days from August 2022 till June 19, the Express Tribune newspaper reported.
“Due to shortage of inventory level, the management of the company has decided to shut down motorcycle and automobile plants from June 22 to July 8, 2023,” the company said.
According to the report, the company had kept its bike plant shut from May 23 to June 16.
Following import restrictions, other businesses like Indus Motor Company have also announced numerous shut downs.
The auto industry is one of the several sectors impacted by the present economic conditions in Pakistan, as importers have had trouble obtaining letters of credit (LCs) due to Pakistan’s low foreign exchange reserves.
In May 2023, car sales plunged by 80 per cent year-on-year, according to Pakistan Automotive Manufacturers Association.
On a month-on-month basis, however, PSMC recorded a growth of 101 per cent to 2,958 units in May 2023.
Back-to-back production shutdowns by companies in cash-strapped Pakistan have led to massive layoffs in the country.
According to a statement by the Pakistan Association of Automotive Parts and Accessories Manufacturers, more than 25,000-30,000 workers in the auto sector have lost their jobs due to an unabated drop in annual sales.
This comes as the government struggles to win a much-delayed International Monetary Fund (IMF) agreement before the current bailout programme expires on June 30.