Suzuki to shut down production in Pakistan in January 2023
What's the story
The woes of the automobile industry in Pakistan continue unabated.
Pak Suzuki Motor Company (PSMC) has announced that it will shut down production at its factories there from January 2 to 6, 2023.
The firm has cited inventory shortage due to restrictions on auto part imports, as the reason behind the move.
Toyota and Millat Tractors Limited have also taken similar steps.
Context
Why does this story matter?
The Pakistani economy is in a mess. Currency depreciation is leading to mounting production costs that is in turn hurting the auto industry.
The rising duties/taxes on vehicles and high interest rates are also turning off potential customers as the costs are getting too prohibitive.
Unless the government eases restrictions on imports, the situation will only get uglier.
Reason
Why did PSMC decide to cease production?
PSMC is a Pak-based subsidiary of Suzuki. It assembles and markets the companies' vans, cars, pick-up trucks, Bikes, and spare parts in the country.
In a notice sent to the Pakistan Stock Exchange, the firm said that it was facing difficulty in the clearance of import consignments, which in turn affected its inventory levels.
Hence, the company decided to shut down production next month.
Poor state
IMC shut factories between December 20-30
PSMC is not the only one to take an aggressive step.
Indus Motor Company (IMC) which assembles Toyota cars in Pakistan closed production facilities from December 20-30 this year, as import restrictions by the State Bank of Pakistan (SBP) and currency depreciation, were delaying import approvals.
Meanwhile, Millat Tractors Limited has stopped manufacturing on Fridays due to low demand for such vehicles.
Information
Why is Pak auto industry hurting?
The auto industry in Pakistan is heavily dependent on imports. After the Pakistani rupee embarked on a free fall, the SBP imposed restrictions on imports. This led to prohibitively high auto prices, which in turn lowered their demand among the public.