KARACHI: Pak Suzuki Motor Company (PSMC) has announced that its motorcycle plant will remain shut until April 15, while its automobile plant operations will be suspended from April 7 to April 14.
The announcement comes amidst the ongoing import restrictions that have affected the auto sector, causing a shortage of inventories.
Last month, the PSMC shut down its motorcycle plant for 12 days due to the non-availability of raw materials, but the automobile plant remained operational.
Association of Pakistan Motorcycle Assemblers (APMA) Chairman Muhammad Sabir Shaikh expressed concern over the shortage of completely knocked down (CKD) parts in the country’s bikes and automobile industry.
“The unavailability of CKD parts has led to the suspension of production lines and a decrease in customers for new cars and motorcycles. No new letter of credit (LCs) are being issued, and the price of CKD parts have surged to unprecedented levels, resulting in a sharp increase of over 22 per cent in the markup on leasing cars, making it more difficult for customers to afford new vehicles,” lamented Shaikh while talking to an English daily.
The APMA chairman said that the current situation was the worst the auto industry has ever faced in the history of Pakistan. “To alleviate the crisis, the government must take immediate action and allow the import of 660cc cars and vans to overseas Pakistanis on easy terms,” he said, urging the government to take prompt measures to address the current crisis and facilitate the auto industry.
Pakistan auto faces a plethora of crises
Pakistan’s auto sector is currently facing a plethora of crises. Other companies, such as Indus Motor Company Limited and Honda Atlas Cars, have also had to halt production in recent months due to economic difficulties.
The Honda Atlas Cars Pakistan had to extend the shutdown of its plant by 15 days, making this its longest shutdown to date. Other automakers, including Indus Motor Company Limited, have also been forced to halt production intermittently.
According to the Finance Division Economic adviser wing’s monthly report of 2023, the auto industry’s performance remained sluggish due to massive increases in input prices, tightening auto finance, and import restrictions. Car production and sales were reduced by 43.14% and 47.5%, respectively, during the July to February period of FY2023, while trucks and buses production and sales decreased by 31.2% and 29.9%.
Former chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), Abdul Rehman Aizaz, expressed concerns about the industry’s future. He said, “The government forbids the import of components or raw materials. From now, the categories for tractors and motorcycles will decline even more. If imports are permitted, the industry can recover to 40% of the quantities seen in 2021–2022.”
He said significant devaluation and new tariffs have already affected 60 per cent of the market. It will take at least three years to reach the 300,000-automobile volume again, which is a very poor omen for the prospects for Foreign Direct Investment (FDI). He also worries about losing a million jobs in Pakistan’s auto industry.
He said that despite a significant price increase and an increase in taxes, the auto sector’s taxes would not reach 50% in dollars this year.
