Honda Cars, Indus Motor issue temporary shutdown notice

KARACHI: Indus Motor Company Limited and Honda Atlas Cars, the two leading car manufacturers in the country, on Friday announced temporary closures of their plants due to hurdles in the import of raw materials.

Indus Motors’ production plant would be shut for two days on May 2 and May 3, while Honda Atlas Cars extended the shutdown for another 15 days, May 1-15.

A company official of Indus Motor in a statement to the Pakistan Stock Exchange on Friday said the company and its vendors were continuously facing hurdles in importing raw materials and in getting their consignments cleared from commercial banks on account of difficulties in opening of credit letters for raw materials. “This has disrupted the supply chain of the company and its vendors are unable to supply raw materials and components to the company,” he said. “Accordingly, the company has insufficient inventory levels to maintain production, therefore the company is unable to continue its production activities.” In view of the above, he said, the company has decided to completely shut down its production plant on May 2 and May 3, 2023.

In a separate announcement, Honda Atlas Cars announced an extension of the production shutdown for another 15 days from May 1 to May 15, 2023. The closure was originally for a period of 23 days from March 9 to March 31, then from April 1 to 14, which was later extended to April 30.

The company cites the government’s stringent measures, including restricting the opening of letters of credit (LCs) for the import of CKD kits and raw materials and halting foreign payments, as the reason for the closure. In a bourse filing, the company secretary said, “As a result, the company is not in a position to continue with its production and ultimately has continued to shut down its plant from May 1, 2023, to May 15, 2023.”

Another leading auto manufacturer, Pak Suzuki, also announced another closure of production this week. Auto parts manufacturers and other industries have been facing multiple closures of their plants due to similar issues.

The car sector is facing serious challenges as a result of the government’s actions, which have caused a lack of raw materials, mainly steel and CKD material.

One of the many difficulties the auto sector in Pakistan is facing is the temporary shutdown of the plants of Honda Atlas Cars, Indus Motor, and Pak Suzuki. The government’s actions to limit the import of components and raw materials have significantly disrupted the industry’s supply chain, which has had a considerable negative impact on both production and sales.

The auto industry makes a substantial economic contribution to Pakistan, creating jobs and raising the GDP of the nation. Due to decreased output and sales, the industry is currently under tremendous strain, and businesses are finding it difficult to survive.

According to one analyst, the sector needs the government’s assistance to overcome its obstacles and prosper in the post-pandemic era. The government has been encouraged to act quickly to address the problems the auto industry is facing, particularly the removal of limitations on LCs for the import of components and raw materials.