Pak Suzuki warns of plant shutdown in August if import restrictions persist

Pak Suzuki Motor Company (PSMC), which has the biggest market share in the passenger car segment, said on Tuesday that it stopped entertaining new bookings from July 1, warning that it may even have to shut down its plant next month if restrictions on importing material for production continues.

“The SBP has introduced a mechanism for prior approval for import under HS code 8703 category (including CKDs),” Shafiq A. Shaikh, Head of Public Relations at Pak Suzuki Motor, told Business Recorder. “Restrictions have adversely impacted clearance of import consignments from ports.

“In July, Pak Suzuki's production did not stop as we adjusted our production plan. Presently, commercial banks are not opening letters of credit, documents of payment for automobiles' CKDs.

"The unavailability of CKDs and related raw material may result in the plant's shutdown in August. If the same situation continues, then from August 2022, we will face bigger problems."

The company's announcement comes after Business Recorder earlier reported that Pakistan’s auto industry is struggling to meet its scheduled delivery periods as restrictions have hindered timely import of auto parts, prompting another assembler to offer refunds to its customers, an unusual development that comes on the back of the country’s falling foreign exchange reserves.

Shaikh said the future of taking booking orders depends on how the situation normalises.

“As a responsible organisation, we are trying to deliver all vehicles that were booked till June 22,” he added.

Meanwhile, Indus Motor Company (IMC) has offered its customers refunds with an additional payment of interest on it. In case they want to carry on with their order, they will have to wait at least three months from the delivery month given on the PBO (Provisional Booking Order Form) and pay the price difference due to the exchange rate situation, the CEO said.

The industry, highly dependent on imports, has been caught in the midst of an exchange-rate crisis with players in the auto sector either passing on the impact of rupee depreciation to its customers or, in the case of IMC, offering its customers refunds with an additional payment of interest on it.

Last month, IMC had announced that it was facing major issues that impacted the delivery schedule of already-booked orders.

The crisis has stemmed from pressure on Pakistan's foreign exchange reserves, a development that has also taken a toll on the rupee, which closed near the 233 level against the US dollar in the inter-bank on Tuesday.

Last week, the rupee endured its worst week in over two decades.

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