Due to import limitations and their effect on parts and accessories, Suzuki Motor Company Ltd (PSMC) has decided to halt operations at its vehicle and motorcycle plants in Pakistan from June 22 to July 8, 2023. The business‘s choice was made barely one week after starting up its Pakistani four-wheeler facility, which had been shut down for more than 75 days.
The approach introduced by the nation’s central bank in May of last year is to blame for the lack of components and accessories. Fully knocked-down kits could no longer be imported without first receiving authorization from the State Bank of Pakistan (SBP), which had a severe impact on inventory levels and consignment clearance.
Suzuki Motor Company
According to the Express Tribune newspaper, PSMC kept its four-wheeler manufacturing closed for more than 75 days between August 2022 and June 19 due to the persistent raw material shortage that has plagued the company for a year.
One of the industries affected by Pakistan’s economic situation is the auto business since importers have had difficulty obtaining letters of credit because of Pakistan‘s low foreign exchange reserves. Car sales in May 2023 fell by 80% year over year, however, PSMC saw a surge of 101% to 2,958 units.
- Suzuki suspends operations in Pakistan from June 22 to July 8, 2023, due to import restrictions.
- PSMC closed four-wheeler manufacturing for over 75 days due to raw material shortage.
- Administration seeks IMF accord before bailout program expires; business confidence drops 21 percentage points.
Over 25,000–30,000 workers in the auto sector have lost their employment as a result of back-to-back production shutdowns by businesses in cash-strapped Pakistan. This is owing to an unrelenting decline in annual sales.
Before the current bailout program expires on June 30, the administration tries to get a long-delayed International Monetary Fund (IMF) accord. According to a recent study by the Overseas Investors Chamber of Commerce and Industry, business confidence in the country dropped by 21 percentage points from 4% in September-October of last year to -25% in March-April.
The three main obstacles to corporate expansion were determined to be high taxation, excessive inflation, and devaluation.
According to Tahir Abbas, Head of Research at Arif Habib Ltd, auto financing currently accounts for 1-2% of all vehicle sales, down from 25-30% during the time of high vehicle demand and low costs. The resurgence of auto finance activity will be largely dependent on the restoration of political stability and the resolution of the dollar problem.