The Toyota manufacturer in Pakistan, Indus Motor Company (IMC), has declared a two-day shutdown of its production owing to “insufficient inventory level.”
This is the seventh notification made by the automaker owing to production cuts in the current fiscal year.
The corporation said that June 26 and 27 would be designated as non-production days at the plant. The Pakistan Stock Exchange (PSX) was notified of the development.
“The company has insufficient inventory levels to maintain production, therefore the company is unable to continue its production activities,” IMC company secretary Muhammad Arif Anzer told the PSX.
According to the notice, IMC and its suppliers have been experiencing difficulties importing raw materials and gaining clearance for their consignments as a result of difficulties opening letters of credit (LCs) and supply issues with select overseas vendors.
“This has disrupted the company’s supply chain, and vendors are unable to supply raw materials and components to the company,” according to the notice.
IMC already observed non-productions four times in 2023. Production was halted from February 1 to 14, March 24 to March 27, May 2 to May 3, and June 3 to June 8.
Auto is one of the sectors impacted by Pakistan’s poor economy, as importers have struggled to get LCs due to the country’s low foreign exchange reserves. As of June 16, the State Bank of Pakistan’s foreign reserves stood at $3.5 billion, barely enough to pay the country’s imports for a month.
Since gaining power, the existing government has attempted to reduce imports in order to conserve the country’s rapidly diminishing foreign reserves.
The center has managed to post a current account surplus in recent months, albeit at the expense of a nationwide economic slump. Import restrictions had a cascading effect on industries that relied on imports to complete their final goods.
Pak Suzuki Motor Co Ltd also declared a two-week stoppage at both its motorcycle and vehicle operations earlier this week, blaming inventory shortages for a sharp drop in car sales — as well as major layoffs in the industry.
According to the Pakistan Automotive Manufacturers Association, car sales fell by 80% year on year in May 2023.
In the first 11 months of FY23, 92,554 units were sold, a 56% decrease from the 210,633 units sold during the same period in FY22.
IMC’s profits fell 62% to Rs5.843 billion in the July-March quarter of FY23, from Rs15.292 billion the previous year.
Earnings per share were Rs74.35 in the period, compared to Rs194.56 in the previous year.
