Honda Atlas Cars Temporarily Halts Operations Due to Supply Chain Disruptions
Honda Atlas Cars highlighted that due to these constraints, it found itself unable to maintain its production activities, a testament to the critical impact of supply chain disruptions on the automotive industry.
Karobar
KARACHI: Honda Atlas Cars (Pakistan) Limited, a subsidiary of Japan's Honda Motor Co., Ltd., recently declared a temporary shutdown of its manufacturing plant, attributing the decision to supply chain disruptions. The company communicated this development in a notice to the Pakistan Stock Exchange (PSX), emphasizing its ongoing challenges in the current economic landscape.
In a statement released on Tuesday, the company disclosed that it would be extending the shutdown from November 08, 2023, to November 09, 2023, in line with its earlier communication dated October 30, 2023. The notice also conveyed that any subsequent adjustments to this schedule would be promptly shared with stakeholders.
This extension follows a prior shutdown announcement from the automaker. Initially, Honda Atlas Cars decided to suspend operations from October 24, 2023, to October 31, 2023, which was subsequently prolonged to November 07, 2023. The company attributed these interruptions to the substantial disruptions in its supply chain, including parts shortages and inventory challenges.
This temporary plant closure is not an isolated incident for Honda Atlas Cars. Earlier in the year, it halted production from March 09 to May 15, citing deteriorating economic conditions in Pakistan and government restrictions related to the issuance of Letters of Credit (LCs).
As indicated by Honda's latest financial results, the company's profit-after-tax for 1QFY24 recorded a significant decline, standing at Rs144.96 million, down nearly 78% compared to Rs658.2 million during the same period the previous year.
The broader context of this development reveals a challenging landscape for the auto sector in Pakistan. The industry heavily relies on imports and has been profoundly affected by the government's measures to restrict imports and LC issuance. Furthermore, increased financing costs and substantial price hikes in the auto sector have collectively dampened consumer demand.
In the initial quarter of FY24, sales in the auto sector totaled 20,983 units, marking a 40% decline compared to the same period in the previous year. The reasons behind this decline are multifaceted, including high vehicle prices, expensive auto financing, and a surge in taxes. According to Waqas Ghani, Deputy Head of Research at JS Research, these factors have cumulatively contributed to a year-on-year reduction in sales, ultimately challenging the automobile industry in Pakistan.
