Due to severe blows from the US Dollar’s appreciation, logistical costs, tax rate increases, and the nation’s overall economic instability, Pakistan’s automobile sector is on the verge of collapse and have decided to stop the production of vehicles in the upcoming days.
The State Bank of Pakistan (SBP), according to sources, is delaying the letter of credit (LC) approval for CKD imports, which is resulting in a drop in production and delivery delays. Due to these problems, #Toyota (IMC) started observing non-production days (NPDs) in order to save operating expenses and make adjustments to the current situation.
Inflation strikes again
According to a recent source, Kia Lucky Motor Corporation Limited (KLMCL) and Honda Atlas Cars Limited (HACL) have similarly chosen to reduce car assembly by switching to single-shift operations. Pak Suzuki Motor Company (PSMC), it continues, will begin tracking NPDs in August.
These actions are likely to make the delivery delay problem worse, which could negatively impact automobile sales in the days to come. While the current situation continues to cost car firms millions of rupees in revenue and cause thousands of employees to lose their jobs, the coalition government is currently silent.
A company official told the media that Suzuki successfully stopped NPDs during the current month, aiming to deliver orders by June. However, the company believes that it is highly dependent on opening LCs and DPS. Toyota is also ready to stop production. The same announcement has come out from Toyota before the announcement from Suzuki.
The company had earlier cited bottlenecks regarding approval of the State Bank of Pakistan’s LC for CKD imports as the main reason for the disruption in production. The company experienced two weeks of slow production in June and July, which has also delayed production.
In addition, Toyota Indus will refund the advance payments for its cars to customers who cannot wait for the delayed delivery. If the situation persists, Toyota Indus may have to shut down all production operations.