Honda Atlas gears up to resume production after over 2-month hiatus

• "Company is now preparing to resume its production in the weeks ahead," Honda Atlas says.
• Improvement seen in accessibility of trade finance facilities for supply chain.
• Automaker will continue production halt for some more days.

KARACHI: After a months-long production break, Honda Atlas Cars has revealed that the automaker was working to resume production activities in the coming weeks, The News reported Tuesday.

It should be noted that the automaker has initiated work on a resumption plan after an improvement was witnessed in the accessibility of trade finance facilities for the supply chain.

Amid an economic downturn in the country, the assembler of Honda-brand vehicles has been on a production break for more than two months.

With the low foreign exchange reserves of Pakistan, the government resorted to some stringent measures, including restrictions on letters of credit (LCs) for the import of CKD (completely knocked down) and raw materials imported by the auto industry.

In a stock filing on Monday, Honda said: “With the consistent efforts of the company and slight improvement in accessibility of trade finance facilities for the supply chain, the company is now preparing to resume its production in the weeks ahead, with the hope to increase the same gradually".

Honda announced the suspension of production activities from March 9, which the company has continued till so far. As per the previous notice, the company was to keep its operations shut till May 15, but Monday’s notice showed it would continue the halt for some more days.

The company has cited the country’s economic conditions, restriction of LCs for the import of CKD kits and raw materials, and a halt in foreign payments as some of the key reasons for its production closure in recent months.

The auto industry is facing a huge setback amid non-production days, reduced consumer affordability on the back of higher interest rates and vehicle prices, rupee devaluation, and escalating petrol prices. The plant shutdowns have also resulted in layoffs in the industry.

According to the latest data released by Pakistan Automotive Manufacturers Association, passenger car sales fell by 85% to 2,844 units in April, against 18,626 units recorded in the same month of last year. 

In the first ten months of the fiscal year 2022-23, a total of 88,620 units have been sold, down 54% against 191.238 units sold during the same period in the same fiscal year.

Honda Atlas Cars recorded a decline of 75% month-on-month to 207 units in April, led by a decline in sales of City and Civic by 74%. Similarly, Pak Suzuki also posted a decline of 74% month-on-month to 1,474 units.

The country’s economy is reeling amid severe political turmoil, while the government has been struggling to win an International Monetary Fund deal despite taking some harsh measures in recent months to amuse the lender of the last resort. 

With all this, it’s hard to predict an improvement in car sales in the foreseeable future.