Indus Motor halts production for two weeks on inventory shortages

KARACHI: Pakistan’s largest car manufacturer Indus Motor Company Limited on Tuesday announced complete shutdown of its plant for two weeks in February on “insufficient inventory levels”.

The company also decided to resume the operations with only one shift until further notice, as unavailability of raw materials has compelled its to shrink production.

“The company and its vendors continue to face major hurdles in import of raw materials and receiving clearance of their consignments from commercial banks. This has disrupted the entire supply chain and the vendors are unable to supply raw materials and components to the company,” Indus Motor Company (IMC) company secretary Muhammad Arif Anzer said in a statement to Pakistan Stock Exchange.

Effective from January 2, commercial banks were advised to prioritise/facilitate the imports of specified sectors only, which did not include the auto sector, according to Anzer, who added that the company didn’t have sufficient inventory levels and was unable to continue its production.

“In view of the above, the company has decided to completely shut down its plant from 1st February, 2023 to 14th February, 2023.

Moreover, the company has also decided to start its production on single shift basis from 15th February, 2023 until further notice,” the bourse statement stated.

The news of plant shut down came after the company increased prices of its cars by up to Rs1.2 million a few days ago, following a huge depreciation of the local currency against the dollar and imports restrictions, which have disrupted the supply chain of the auto industry.

IMC is a joint venture between certain companies of House of Habib of Pakistan, Toyota Motor Corporation, and Toyota Tsusho Corporation of Japan. Incorporated in 1989, the company manufactures and markets Toyota brand vehicles in Pakistan, which include several variants of the flagship Corolla’ and Yaris in the passenger car segment, Hilux in the light commercial vehicle segment, and Fortuner in sports utility vehicle segment.

The company has a workforce of over 3,000 employees and a network of 50 independent 3S sealerships spread across the country. It also has 52 local vendors that supply parts.

Meanwhile, Agriauto Industries Limited, a spare parts manufacturer, also announced to shut down its plant partially in February.

It supplies auto parts to leading car manufacturers including Indus Motor, Honda, and Pak Suzuki.

“Due to reduction in production volumes of our major customers, the company will be observing partial shutdown during the month of February 2023,” the company secretary said in a bourse announcement.

Passenger car sales (PAMA members) plunged 44 percent in December 2022 from a year earlier, on import bottlenecks that have continued to weigh on the country's fragile consumption.