Indus Motor Company Limited (INDU), the assembler and seller of Toyota-brand vehicles in Pakistan, said it will completely shut down its plant from February 1 to February 14, citing inventory shortage.
When the company restarts production on February 15, it will do so on a single-shift basis until further notice, stated a communication issued to the Pakistan Stock Exchange (PSX) on Tuesday.
Bleak times ahead for Pakistan’s manufacturing sector
Indus Motor said the company and its vendors continue to face major hurdles in import of raw materials and receiving clearance of their consignments from commercial banks.
“In light of the recently introduced mechanism vide EPD Circular No. 20 of 2022 dated December 27, 2022, (effective from 2nd January, 2023), commercial banks are advised to prioritize / facilitate the imports to specified sectors only, which does not include auto sector,” read the notice.
“This has disrupted the entire supply chain and the vendors are unable to supply raw materials and components to the company. Accordingly, the company has insufficient inventory levels, therefore, the company is unable to continue its production activities,” it added.
Days ago, Indus Motor increased prices of its cars by as much as Rs1.16 million, following significant depreciation of the Pakistani rupee against the US dollar. This was its second price-hike in two weeks.
Last month, the central bank decided to withdraw the restrictions placed on imports with effect from January 2, 2023. 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.
Automobile sales in Pakistan fell 38% in December 2022 to 16,811 units on a year-on-year basis, according to data released by Pakistan Automotive Manufacturers Association on Wednesday.
The decrease was driven by restrictions on import of completely knocked down (CKD) units and problems pertaining to opening of letters of credit (LCs).