KARACHI / ISLAMABAD: Amid a severe shortage of raw materials, Pak Suzuki Motor Co (PSMC) has made its third announcement of halting motorcycle production in this fiscal year.
The automobile manufacturer issued a notice to the Pakistan Stock Exchange (PSX), announcing the suspension of production for the next 12 days. This suspension will begin on September 1 and conclude on September 12, 2023.
Previously, PSMC had declared a shutdown from August 18 to August 31, 2023. This shutdown was reported by the company’s secretary.
Before that, the company had closed its operations from July 31 to August 15, 2023, due to inventory constraints.
The bourse filing clarified that, despite the production halt, regular operations would continue at the vehicle manufacturing plant.
Since July of the preceding year, Pak Suzuki has been facing challenges related to raw material shortages. These challenges primarily stem from difficulties in importing these essential components.
The country’s declining foreign exchange reserves have exacerbated import disruptions.
Raw Material Shortage Impact and Recovery
In a note, analyst Sunny Kumar from Topline Securities mentioned; “PSMC produced 19,293 units with capacity utilisation of 26% in 1H2023 compared to 76,325 units produced with capacity utilisation of 102% in 1H2022.”
The analyst added that the company’s management is anticipating an economic recovery in FY24. This recovery is expected to be driven by increased agricultural output, the relaxation of import restrictions, and an anticipated boost in manufacturing and construction activity.
PSMC’s situation parallels that of other well-known automakers like Honda Atlas and Indus Motor Company, the local manufacturer of Toyota vehicles. These automakers have been repeatedly shutting down production due to the ongoing shortage of raw materials. This shortage has also impacted the automobile parts industry, leading to intermittent production stoppages.
Similarly, Agriauto Industries Limited, a prominent automotive parts manufacturer, announced a partial plant closure in September due to reduced production. Additionally, the company’s wholly owned subsidiary, Agriauto Stamping Company Pvt Ltd, will also experience a partial shutdown during the same period, as confirmed by the company secretary.
The announcement of Pak Suzuki’s latest production halt has raised concerns among employees, stakeholders, and the general public. The motorcycle plant, a significant division within the company, plays a substantial role in providing employment in the country.
Experts anticipate that this closure will not only affect the company’s workforce but also have a broader impact on the economy. An industry observer emphasized that the suspension of motorcycle production highlights the enduring challenges faced by Pakistan’s automotive industry.
This expert stressed the importance of coordinated efforts between stakeholders and government bodies to address the root causes of raw material shortages and prevent further disruptions.
