Honda and Pak Suzuki are closing their plants for longer because of inventory shortages and import limits.
Thursday, two big automakers, Honda Atlas Cars (Pakistan) Limited and Pak Suzuki Motor Company Limited, said they would keep their plants closed for longer because of the country’s continuing economic problems.
In a filing with the government, Honda Atlas said it couldn’t keep making cars and would have to close its plant from April 16 to April 30.
“Further to our letter of March 31, 2023, and in light of Pakistan’s current economic situation, where the government has taken strict measures like limiting the opening of letters of credit for imports of CKD kits and raw materials and stopping foreign payments, the company’s supply chain has also been severely disrupted,” the notice said.
Honda Atlas shut down its plant on March 8, and the shutdown was supposed to be over by March 31. But the company later made the shutdown last until April 15. It’s the longest break the company has ever had.
In a separate notice, Pak Suzuki said that it would keep its motorcycle plant closed until April 28, claiming a lack of inventory. Since March 20, the company had already been taking days off from making the two-wheelers. It had also said that its car plant would stop making cars on April 7 and 14 because there were not enough parts in stock.
The car industry is still going through a lot of problems. In the past few months, a number of automakers have announced full or partial shutdowns, citing reasons like lower market demand and an inability to keep inventory because companies are having trouble getting LCs.
The country’s foreign exchange stocks are very low, so it is said that banks are refusing to open LCs for things that are not “essential.”
Toyota Motors, Pakistan Suzuki, and many other companies that make cars and motorcycles have shut down their factories, which has hurt their sales. Companies have also raised the prices of their CKD models, which has made it even harder for people to buy things.
The country still doesn’t have enough money to pay for imports and other payments to other countries. The central bank has just over $4.03 billion in foreign exchange funds, which is just enough for a month’s worth of imports.
In the meantime, the government is trying to finalize an agreement with the International Monetary Fund (IMF) to bring back the Extended Fund Facility (EFF) program, which, if accepted by its board, would release a funding tranche of more than $1bn.