Automakers continue to shut production amid falling demand, raw material shortage

Amid a decline in demand and the inability to procure much-needed raw material, various companies in the auto sector have yet again announced a temporary shutdown of operations.

Pak Suzuki Motor Company (PSMC) announced on Friday another shutdown of its plants amid inventory shortage.

In its notice to the Pakistan Stock Exchange (PSX), the firm said: “Based on the current level of sales demand and to optimize the inventory of finished goods, the management of the company has decided to shut-down motorcycle plant from December 01 to December 06, 2023.”

However, its automobile plant will remain operative.

During this year, the Japanese automaker has announced shutdowns over a dozen times. Last month, it said it would keep its automobile plant shut till November 08.

It made similar announcements in November, October, September, August, June and May as well, citing a lack of raw material.

Back in October, the Board of Directors (BoD) of PSMC decided to purchase all outstanding shares and delist from the PSX, citing low valuations and losses.

Meanwhile, Agriauto Industries Limited, a manufacturer of auto parts, said on Friday it will observe a partial shutdown this month.

“Due to reduction in production volumes of our major customers, the company will be observing partial shutdown during the month of December 2023,” Agriauto said in a notice to the bourse.

It added that Agriauto Stamping Company Pvt. Ltd., its wholly owned subsidiary, will also observe a partial shutdown in December.

Agriauto made a similar announcement in November as well.

Its clients include Suzuki, Toyota and Atlas Honda, which are currently struggling and have shut down operations on multiple occasions as the sector deals with inventory shortages due to import restrictions.

A number of automakers including Indus Motor Company and Honda Atlas have also announced temporary shutdown of operations in recent weeks.

The country’s auto sector, hugely dependent on imports, has been hit hard by the government’s decision to curb imports and restrict the issuance of LCs.

Additionally, experts have raised concerns that a surge in the import of used cars is causing adverse impact on the local auto sector.

According to the statistics, over 6,000 used cars were imported in the financial year 2022-23, with 1,800 units making their way into the country from May to June this year alone, giving a significant blow to the already beleaguered local auto industry.