Auto Manufacturers Grapple with Shutdowns Amidst Declining Demand and Raw Material Shortages
The Pakistani automotive sector faces further challenges as leading companies, including Pak Suzuki Motor Company and Agriauto Industries Limited, announce temporary shutdowns due to declining demand and raw material shortages. The industry's struggle is exacerbated by government measures limiting imports and raising concerns about the influx of used cars negatively impacting local manufacturers.
Karobar
Pak Suzuki Motor Company (PSMC) recently declared another temporary shutdown of its plants due to an inventory shortage. The company, in a notice to the Pakistan Stock Exchange (PSX), stated, "To optimize the inventory of finished goods, the management has decided to shut down the motorcycle plant from December 01 to December 06, 2023, while the automobile plant will remain in operation."
This marks over a dozen shutdowns by the Japanese automaker throughout the year. In October, the Board of Directors decided on delisting from the PSX, citing low valuations and ongoing losses.
Meanwhile, Agriauto Industries Limited, a key auto parts manufacturer, has also announced a partial shutdown this month. The company attributed the decision to a reduction in production volumes from major customers. Its subsidiary, Agriauto Stamping Company Pvt. Ltd., will similarly observe a partial shutdown in December.
Agriauto, which supplies components to Suzuki, Toyota, and Atlas Honda, has faced challenges as its clients grapple with inventory shortages due to import restrictions. Other major automakers, including Indus Motor Company and Honda Atlas, have also announced temporary shutdowns in recent weeks.
The auto sector in Pakistan, heavily reliant on imports, has been significantly impacted by the government's measures to curb imports and restrict the issuance of Letters of Credit (LCs). Furthermore, concerns have been raised by experts about the adverse effects of a surge in the import of used cars on the local auto industry. Statistics reveal that over 6,000 used cars were imported in the financial year 2022-23, with 1,800 units arriving between May and June alone, dealing a substantial blow to the already beleaguered local auto industry.
