Pak Suzuki extends plant closure on inventory shortages

• Pak Suzuki's motorcycle plant to remain operative.
• Automobile plant to remain closed till Jan 20.
• Millat Tractors to resume production from Monday.

KARACHI: Pak Suzuki Motor Company (PSMC), one of the country’s largest car manufacturers, once again extended its closure till January 20 owing to inventory shortages. 

The production activities of the automobile company have remained suspended for most days since the start of the new year, blaming a dearth of imported parts and accessories, as banks are rejecting or retiring letters of credit (LCs) amid US dollar scarcity, exchange rate crisis, and fast-depleting foreign reserves of the country.

“Due to continued shortage of inventory level, the management of the company has decided to extend the shutdown of automobile plant from January 16, 2023 to January 20, 2023," PSMC stated in an announcement to the Pakistan Stock Exchange (PSX).

However, the motorcycle plant would remain operative, it added.

It was the third consecutive announcement by the company of keeping brakes at its production activities in 2023. PSMC welcomed the new year with a notice that it would observe non-production days from January 2 to January 6, having been affected by import curbs pushed by non-issuance of letters of credit.

The central bank had introduced a mechanism for prior approval for import under "HS code 8703 category (including completely knocked down-CKDs) vide circular No. 09 of 2022 dated May 20, 2022", the company said in a note to PSX then.

Last week, PSMC notified the bourse again that it would keep the automobile plant shut from January 9 to January 13, attributing the same reasons for curbs on the import of CKD kits.

Import bottlenecks have continued to affect the auto industry in recent months, which is highly dependent on imported parts and accessories.

Passenger car sales plunged 44% in December from a year earlier, dropping to 13,768 units, against 24,471 units recorded in December 2021, as per data released by Pakistan Automotive Manufacturers Association (PAMA). 

Pak Suzuki had reported a decline of 8% month-on-month to 11,342 units, it added.

It should be noted that PSMC is engaged in the assembling, progressive manufacturing and marketing of Suzuki cars, pickups, vans, 4x4s and motorcycles and related spare parts. 

Millat Tractors to resume production 

Meanwhile, Millat Tractors Limited (MTL) is to resume its production activities from January 16, it announced in a bourse filing on Friday.

The company was observing non-productive days on the back of lower demand for tractors and cashflow constraints. Earlier, MTL had stopped operations on Fridays on December 16, 2022.

Tractors’ demand has declined owing to a catastrophic flood last year in the country. Sales of tractors dropped to 1,015 units, from 4,476 units in December 2021, according to PAMA data.