Import restrictions: Indus Motor suspends production again
- This is Indus Motor’s second announcement of production closure this year
Indus Motor Company Limited (INDU), the assembler and seller of Toyota-brand vehicles in Pakistan, has once again decided to shut production from March 24 to March 27, citing raw material and component shortages.
The automaker shared the development in a notice to the Pakistan Stock Exchange (PSX) on Friday.
Indus Motor said that the company and its vendors continue to face hurdles on import of raw materials and receiving clearance for their consignments from commercial banks, on account of difficulties in opening Letters of Credit (LCs) for raw materials by banks.
“This has disrupted the supply chain of the company and its vendors are unable to supply raw materials and components to the company. Accordingly, the company has insufficient inventory levels to maintain production, therefore the company is unable to continue its production activities,” read the notice.
Therefore, “the company has decided to completely shut down its production plant from 24th March, 2023 to 27th March, 2023 (both days inclusive)”.
This is Indus Motor’s second announcement of production closure this year. Earlier, the company announced a complete shutdown of its plant from February 1 to February 14, citing an inventory shortage.
Last month, it offered a full refund with interest to its customers due to a production dip expected in February and March.
CEO Ali Asghar Jamali, while acknowledging the tough time for the local auto industry, had said back then that the restrictions on CKD kits as one of the major issues impacting the auto sector, causing manufacturers to only operate at 40-45% of their capacity.
Pakistan’s auto industry, highly dependent on imports, has been caught in the midst of a crisis, as the State Bank of Pakistan (SBP), after unabated rupee depreciation, imposed restrictions on the opening of LCs. Industries are facing hindrances in operations as the country’s foreign exchange reserves remain low.
Back in January, the central bank decided to withdraw the restrictions placed on imports.
The SBP said that Authorised Dealers (ADs) may prioritise or facilitate imports under essential imports, energy imports, imports by export-oriented industry, imports for agriculture inputs, deferred payment / self-funded imports and import for export-oriented projects near completion.
However, import restrictions due to dollar shortage are still hampering many industries including the auto sector.