Honda Atlas, Pak Suzuki temporarily suspend production amid supply chain crisis

KARACHI: Pakistan’s two major automotive industry players, Honda Atlas Cars and Pak Suzuki Motor Company (PSMC), on Wednesday separately announced a temporary shutdown of their production plants due to an ongoing shortage of essential raw materials.

The PSMC issued a statement through its company secretary, expressing the cause behind this decision. The statement affirmed, “Due to the shortage of inventory levels, the management of the company has decided to shut down the automobile plant from October 25, 2023, to October 27, 2023. However, the motorcycle plant will continue its operations.”

Likewise, Honda Atlas Cars also shared a formal announcement through their company secretary, addressing the pressing issue of raw material shortages. The statement disclosed, “The current level of inventory and parts shortages within the company’s supply chain has severely disrupted operations. As a result, the company is unable to continue production and, consequently, will halt its plant from October 24, 2023, to October 31, 2023.”

The predicament faced by these automotive giants mirrors a broader issue that has been plaguing Pakistan’s automobile sector for over a year. Persistent shortages in inventory levels have driven a cycle of temporary shutdowns across the industry.

Just recently, Indus Motor Company Limited (IMC) made headlines with its decision to close its production plant for an entire month, extending the impact of these supply chain challenges even further. IMC’s month-long shutdown emphasises the extensive and far-reaching impact these issues have had on Pakistan’s industrial landscape.

It is important to note that this problem does not only affect the automobile manufacturers. A wide range of industries, including auto parts manufacturers, and companies dependent on imported raw materials, find themselves in a similar predicament. The cumulative effect of these challenges is that many businesses are forced into periodic shutdowns, further straining the supply chain.

The ongoing shortage of essential raw materials is predominantly attributed to the scarcity of foreign exchange reserves in Pakistan. This challenge has resulted in a difficult process of opening letters of credit (LCs), hampering the ability to import crucial components. As a consequence, the entire supply chain, from automobile manufacturers to their suppliers, faces severe disruptions, leaving them with no choice but to temporarily halt production.

The news of Honda Atlas Cars and PSMC’s temporary shutdowns underlines the urgency of resolving these supply chain issues to ensure the stability and productivity of Pakistan’s automotive sector.

Stakeholders within the industry, along with the government, will need to work together to address the root causes and establish long-term solutions to this ongoing challenge. The automotive sector, being a significant contributor to Pakistan’s economy, relies on a consistent and reliable supply chain for continued growth and prosperity.

Analysts are of the view that swift action and cooperative strategies are essential to mitigate these disruptions and pave the way for a robust and resilient automotive industry.