Pak Suzuki extends motorbike production shutdown:
PSMC, the Pak Suzuki Motor Company, has announced that it will shut down its motorbike plant until April 15th and suspend its automobile plant operations from April 7th to April 14th due to import restrictions that have affected the auto sector, causing a shortage of inventory.
Last month, PSMC shut down its motorbike plant for 12 days due to a lack of raw materials, but the automobile plant remained operational.
Muhammad Sabir Shaikh, the Chairman of the Association of Pakistan Motorcycle Assemblers (APMA), expressed concern over the shortage of completely knocked down (CKD) parts in the country’s bikes and automobile industry.
According to him, the unavailability of CKD parts has led to the suspension of production lines, a decrease in the number of customers for new cars and motorcycles, and a surge in the price of CKD parts to unprecedented levels, resulting in a sharp increase of over 22% in the markup on leasing of cars.
He further lamented that the current situation is the worst the auto industry has ever faced in the history of Pakistan.
Shaikh urged the government to take immediate action and allow the import of 660cc cars and vans to overseas Pakistanis on easy terms to alleviate the crisis. He also requested prompt measures to address the current crisis and facilitate the auto industry in the country.
Several crises are currently affecting Pakistan’s auto sector, with companies like Indus Motor Company Limited and Honda Atlas Cars having to halt production due to economic difficulties.
Honda Atlas Cars Pakistan extended its plant shutdown by 15 days, marking its longest shutdown to date, while other automakers have intermittently halted production.
March 2023 Monthly report
According to the March 2023 Monthly report of the Finance Division Economic Adviser’s Wing, the auto industry’s performance has remained subdued due to import restrictions, tightening auto finance, and massive increases in input prices.
Car production and sales decreased by 43.14% and 47.5%, respectively, during the July to February period of FY2023, while trucks and buses production and sales decreased by 31.2% and 29.9%.
Abdul Rehman Aizaz, the former chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), expressed concern about the industry’s future.
He stated that the government forbids the import of components or raw materials, which will further decrease the categories for tractors and motorcycles.
If imports are allowed, he believes the industry can recover to 40% of the quantities seen in 2021-2022.
Aizaz stated that significant devaluation and new tariffs have already affected 60% of the market, and it will take at least three years to reach the 300,000 automobile volume again. This is not a good sign for the prospects for Foreign Direct Investment (FDI).
He also expressed worries about losing a million jobs in Pakistan’s auto industry.
He mentioned that despite a significant price increase and an increase in taxes, the auto sector’s taxes will not even reach 50% in dollars this year.
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