Pak Suzuki shuts motorbike unit for 2nd time in September

KARACHI: Pak Suzuki Motor Company (PSMC) has decided to shut down its motorcycle production for three days due to a persistent shortage of crucial raw materials, a bourse filing said on Tuesday.

A notice to the Pakistan Stock Exchange said that the motorcycle manufacturing facility will remain inactive from September 20 to 22, 2023.

This is the PSMC’s second shutdown this month. The production unit of the company was closed from September 1 to September 12, 2023, and had followed a previous shutdown from August 18 to August 31, 2023, as reported by the company’s secretary.

Pak Suzuki has been grappling with raw material shortages since July of the preceding year, primarily stemming from difficulties in importing essential components. The country’s dwindling foreign exchange reserves have contributed to these import disruptions.

Analysts have pointed out that the substantial rise in petrol price has burdened the public, who are abandoning cars and opting to travel via motorcycles to cut down their fuel expenses. This has pushed the demand for motorcycles higher despite the price of bikes going up.

Analyst Sunny Kumar of Topline Securities in his note has pointed out that Pakistan’s bike sales went up 20 percent month-on-month, but down 14 percent year-on-year in August 2023.

The brokerage house said that Pak Suzuki achieved higher sales in August 2023, selling 1,722 motorcycle units, up an impressive 80 percent month-on-month compared to the previous month’s sales of 957 units.

However, the year-on-year sales slumped by 50 percent. It should be noted that the PSMC is not the only company to be facing this issue. Suzuki’s situation mirrors that of other renowned automakers, such as Honda Atlas and Indus Motor Company, the local manufacturer of Toyota vehicles.

All have been experiencing repeated shutdowns due to the ongoing raw material shortage. This scarcity has also affected the automobile parts industry, causing intermittent production stoppages.

The country’s auto sector is facing tough times because of the challenging economic environment, shrinking consumer purchasing power, higher duties and taxes imposed by the federal government, and high interest rates.