All the automakers have been instructed to refute the idea that the episode will finish soon due to the prevailing economic commotion. Gaining attention for rupee and dollar depreciation hasn’t prompted any favourable responses because the current administration isn’t helping automakers in any way – the practise of not issuing LCs is still in effect.
As a result, businesses continue to announce production reductions. Pakistan Suzuki Motor Company, which, like all manufacturers, is suffering from the current economic crisis, has announced a two-day production halt.
According to the company’s announcement, PSMC will stop producing for two days, from August 18 to 19, due to a Letter of Credit delay.
— Nasir Tufail (@NasirTufayl) August 16, 2022
According to reports, Pakistan’s State Bank is reluctant to issue the letter of credit for CKD imports, which has prompted automakers to reduce production days.
Toyota Indus previously had to reduce production and operational costs in order to survive due to the same problem.
The New Strategy
The auto industry is facing enormous obstacles as a result of the federal government’s new policy, which made State Bank of Pakistan (SBP) prior authorisation for purchases of the items mandatory. According to information, this technique is generating problems with the delivery of fully knocked-down (CKD) kits of vehicles as well as other significant imports for the auto industry.
Read more: Pak Suzuki comes up with something new!
According to media sources, all major automakers will stop producing by the end of next week if import transactions for CKD kits were not approved in a timely manner. The entire supply chain, including neighbourhood dealers and suppliers, would also be disrupted. We are still seeing the same thing months later.
An import ban on CBUs
Earlier, the government outlawed imports of roughly 800 commodities across 33 categories as a drastic action to rein in the growing import cost. Among the prohibited commodities were both new and used autos.