Honda Atlas, Sitara Peroxide extend plant shutdowns

KARACHI: Honda Atlas Cars (Pakistan) Limited (HACPL) and Sitara Peroxide Limited (SPL) announced on Tuesday that they are extending their plant shutdowns due to supply chain disruptions and repair work.

HACPL, a subsidiary of Honda Motor Co., Ltd. of Japan, said in a notice to the Pakistan Stock Exchange (PSX) that it has decided to further extend the shutdown of its plant from Nov. 8 to Nov. 9, after initially suspending operations from Oct. 24 to Oct. 31 and then to Nov. 7.

“In pursuance to our letter dated October 30, 2023, the company has decided to further extend the shutdown of its plant from November 08, 2023, to November 09, 2023,” the automaker said. "Any change in plan will be updated accordingly."

SPL, a chemical producer of hydrogen peroxide, said in a separate notice to the PSX that it is suspending its plant operations for another 30 days, after announcing a month-long suspension in October due to repair work and replacement of heavy cables.

“In pursuant to our letter dated October 13, 2023 with respect to suspension of production due to repair work and replacement of heavy cables…, we would like to inform that the management has decided the suspension of plant operations for another 30 days.”

The company has been facing difficulties in procuring raw materials and chemicals for its production and has been looking for other avenues to generate funds, according to its previous notices.

The auto industry, which relies heavily on imports for raw materials and parts, is facing a crisis as the import restrictions and the rising cost of borrowing have led to a severe shortage of inventory and a slump in demand, forcing several automakers to shut down their plants temporarily.

Several automakers have announced temporary shutdowns of their plants in recent weeks, citing a lack of inventory and low sales. Pak Suzuki Motor Company, the country's largest carmaker shut down plant from Nov. 6 to Nov. 8, adding to a series of shutdowns that it has announced since May.

Other automakers, such as Indus Motor Company, have also suspended their operations intermittently in recent weeks. The auto sector's woes are partly a result of the government's decision to curb imports and restrict the issuance of letters of credit to ease pressure on the country's foreign exchange reserves and narrow its current account deficit.

Analysts said the government measures have made it difficult for automakers to import raw materials and parts, which account for more than 70 percent of their production costs. The auto sector is also facing a decline in demand from consumers, who are deterred by the high interest rates and the steep increase in car prices. The higher borrowing costs have reduced the availability of auto financing, which accounts for more than 50 percent of car sales in Pakistan, according to analysts.