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KARACHI: Pak Suzuki Motor Company (PSMC) has announced that its motorcycle plant will be closed until April 15th
and that operations at its automobile plant will be halted from April 7th to April 14th. This decision was made in response to ongoing import restrictions that have harmed the auto industry, resulting in a shortage of inventory.
PSMC shut down its motorcycle plant for 12 days last month due to a lack of raw materials, but the automobile plant remained operational.
Muhammad Sabir Shaikh, Chairman of the Association of Pakistan Motorcycle Assemblers (APMA), expressed concern about a lack of completely knocked down (CKD) parts in the country’s motorcycle and automobile industries.
“The inability to obtain CKD parts has resulted in the suspension of production lines and a decrease in the number of customers purchasing new automobiles and motorcycles.” Furthermore, no new letters of credit (LC) are being issued, and the price of CKD parts has risen to unprecedented levels, resulting in a 22% increase in the markup on car leasing, making it more difficult for customers to afford new vehicles,” lamented Shaikh.
According to the APMA chairman, the current situation is the worst the auto industry has ever faced in Pakistan’s history. To alleviate the crisis, the government must act quickly and allow easy importation of 660cc cars and vans to overseas Pakistanis. He urged the government to take immediate action to address the current crisis and help the country’s auto industry.
Pakistan’s auto industry is currently facing a number of crises. Due to economic difficulties, other publicly traded companies, including Indus Motor Company Limited and Honda Atlas Cars, have had to halt production in recent months. Honda Atlas Cars Pakistan had to extend its plant shutdown by 15 days, making it the company’s longest shutdown to date. Other automakers, including Indus Motor Company Limited, have been forced to temporarily halt production.
The auto industry’s performance remained subdued in March 2023, according to the Finance Division Economic Adviser’s Wing Monthly report, due to massive increases in input prices, tightening auto finance, and import restrictions. Car production and sales fell by 43.14% and 47.5%, respectively, from July to February of FY2023, while truck and bus production and sales fell by 31.2% and 29.9%, respectively.
Abdul Rehman Aizaz, former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), expressed his concerns about the industry’s future. “The government prohibits the import of components or raw materials,” he explained. Tractor and motorcycle categories will continue to decline in the future. If imports are permitted, the industry can recover to 40% of the levels seen in 2021-2022.”
He went on to say that 60% of the market has already been impacted by significant devaluation and new tariffs, and it will take at least three years to return to the 300,000-automobile volume, which is a bad omen for the prospects for Foreign Direct Investment (FDI). He is also concerned about the loss of a million jobs in Pakistan’s auto industry.
Despite significant price increases and tax increases, he claims that the auto industry’s taxes will not even reach 50% in dollars this year.
