KARACHI: Indus Motor Company, which assembles Toyota vehicles in Pakistan, has achieved a significant milestone by becoming the first company in the four-wheeler segment to start exporting high-quality auto parts to Toyota Egypt.
The company recently partnered with Toyota Egypt and has already sent its first shipment this month, marking the beginning of a new era for original equipment manufacturers (OEMs) in Pakistan. While this achievement is notable, Indus Motor Company’s CEO, Ali Asghar Jamali, has cautioned that it is still early to view it as a turning point for Pakistan’s struggling auto industry.
The auto sector in Pakistan has been facing challenges such as constraints on Letters of Credit issuance and import restrictions due to low foreign exchange reserves. Although the State Bank of Pakistan (SBP) has lifted some restrictions, it will take time for the situation to normalize. Additionally, the depreciation of the rupee, high inflation, and record-high key interest rates have led to increased automobile prices and reduced buyer financing, resulting in several plant shutdowns in the sector.
While Indus Motor Company’s current export capacity is limited due to raw material constraints in Pakistan, Jamali remains hopeful for the future. Successful exports to Toyota Egypt could help build confidence and create opportunities to export more parts. He also believes that other manufacturers will gain confidence and explore the export avenue.
The partnership between Indus Motor Company and Toyota Egypt aligns with the goals outlined in the Auto Industry Development and Export Policy (AIDEP) 2021-2026. This milestone sets a precedent for other assemblers in Pakistan’s auto sector to consider export opportunities, contributing to the growth and development of the country’s automotive industry. Auto sales in Pakistan have been severely impacted by the country’s low foreign exchange reserves, devalued currency, and high inflation. Import restrictions have forced most auto manufacturers to halt production multiple times. On June 23, 2023, Indus Motor Company (IMC) announced its fifth plant shutdown of the year due to insufficient inventory levels.
To address these challenges, the central bank of Pakistan has lifted import restrictions, a move that is likely to please the International Monetary Fund and potentially lead to a $3 billion short-term arrangement. With no restrictions on imports, IMC intends to increase its exports of auto products in the future.
