Thursday September 28, 2023

Honda Cars announces 3-week production break on parts shortage

March 09, 2023

KARACHI: Honda Atlas Cars (Pakistan) Ltd, one of the largest car manufacturers in Pakistan, on Wednesday announced closure of its plant for a period of 23 days from March 9 to March 31, blaming current economic situation in the country.

The government’s import curbs amid low foreign exchange reserves have caused serious supply chain issues, making it difficult to continue production, according to the company.

“Considering the current economic situation of Pakistan whereby the government resorted to stringent measures including restricting the opening of LCs [letters of credit] for the import of [Completely Knocked Down] CKD kits, raw material and halting foreign payments, the company’s supply chain has also been severely disrupted by such measures,” the company secretary said in an announcement at the Pakistan Stock Exchange.

As a result, he added, Honda Atlas was not in a position to continue with its production and ultimately to shut down its plant from March 09, 2023 to March 31, 2023.

Indus Motors and Pak Suzuki, two other leading auto manufacturers in the country, have also faced multiple closures of their plants due to similar issues. A recent temporary shutdown of Sazgar's four-wheeler plant was another example of the difficult situation faced by the country's auto industry.

The government's measures have led to a shortage of raw materials, particularly CKD material and steel, which has been causing significant difficulties for the auto industry. The industry has been calling for the government to take steps to ease the situation, including facilitating the import of raw materials and providing incentives for the localization of the auto parts industry.

The auto industry is a significant contributor to Pakistan's economy, providing employment opportunities and contributing to the country's GDP. The current situation has put the industry under immense pressure, with companies struggling to stay afloat due to reduced production and sales.

The government has been urged to take immediate steps to address the issues faced by the auto industry, including the lifting of restrictions on LCs for the import of raw materials and components. The industry has also called for the implementation of policies to promote local production and reduce reliance on imports.

One analyst was of the view that in the long term, the auto industry was optimistic about its prospects in Pakistan, given the country's growing population and increasing demand for automobiles. However, the industry needed the government's support to overcome the challenges it faces and emerge stronger in the post-pandemic era, he said.