Auto sector woes: Hinopak suspends assembly plant operation
- Cites hurdles in opening Letters of Credit for import of raw materials as reason
Hinopak Motors Limited (HINO) has become the latest automaker to shut operations on a temporary basis as it faces consequences of government’s import restrictions and struggles to continue production.
Hinopak, which assembles and manufactures Hino buses and trucks, shared the development in a notice to the Pakistan Stock Exchange (PSX) on Tuesday.
“Considering the current economic situation of Pakistan, whereby the commercial banks have been advised by the State Bank of Pakistan (SBP) to prioritize/facilitate the imports to essential sectors only, which does not include the auto sector. Consequently, the company has been facing hurdles in opening of LCs for the import of CKDs and other raw materials,” read the notice.
“Accordingly, the company is not in a position to continue with its production activities and has to temporarily shut down its chassis assembly plant from March 24, 2023 to April 04, 2023,” it added.
Hinopak is a subsidiary of Hino Motors Limited Japan and the ultimate parent company is Toyota Motors Corporation Japan.
Pakistan’s auto industry, highly dependent on imports, has been caught in the midst of a crisis, as the SBP, after unabated rupee depreciation, imposed restrictions on the opening of LCs. Industries are facing hindrances in operations as the country’s reserves remained low.
On Monday, Ghandhara Tyre and Rubber Company Limited (GTYR), which manufactures and trades tyres and tubes for automobiles and motorcycles, said it will temporarily shut down production from March 24 to April 3, citing supply chain disruptions.
Last week, Pak Suzuki Motor Company (PSMC) announced the shutdown of its motorcycle plant from March 20 to March 31 as it deals with an inventory shortage due to import restrictions.
Earlier, Honda Atlas Cars Pakistan Limited announced the longest plant shutdown to date in the current economic crisis amongst the country’s automakers. The company said its plant would shut from March 9, 2023, to March 31, 2023.
Pakistan remains engulfed in a balance of payment crisis, the country’s central bank chief had said that import compression would be eased after the completion of the International Monetary Fund (IMF) review.