The Indus Motor Company, which is in charge of Toyota vehicle assembly in Pakistan, has chosen to suspend production from August 25 to September 6.
The rationale given for the interim suspension is a significant drop in demand, which is ascribed to lower spending power among consumers.
The company made the notification about this development in an official statement to the Pakistan Stock Exchange (PSX) on Thursday.
During fiscal year 2022-2023, the auto industry faced continuing headwinds as a result of an unfavorable economic situation, which included reduced consumer purchasing capacity and an increase in federal government taxes and tariffs.
The combination of these issues has resulted in a steady decline in automotive demand.
Given the current conditions of slow demand and manageable inventory levels, the company has decided to undertake a temporary shutdown of its manufacturing facilities. The outage is expected to last from Friday, August 25 through Wednesday, September 6.
Despite the last-minute deal with the International Monetary Fund (IMF), both sectors and consumers in Pakistan are still mired in the financial difficulties that they faced previously.
Several companies from other industries, including Sitara Peroxide and Pak Suzuki Motor Company, had previously announced plans to suspend operations, citing a variety of issues ranging from fluctuating demand to supply chain constraints.
The automobile sector in the country is particularly noteworthy, as it is facing a number of economic issues. Among these is the industry’s continued battle to get required Letters of Credit (LCs) for import operations.
Aside from the challenges associated with LCs, the sector is dealing with dwindling consumer demand, which can be attributable to increased price structures and record-high interest rates. The further depreciation of the native currency, the rupee, aggravates the problem.
According to the Pakistan Automotive Manufacturers Association (PAMA), car sales fell 57% year on year (YoY) in the first month of fiscal year 2023-24.
For the month of July, cumulative sales from PAMA-registered car manufacturers totaled 5,092 units.
Furthermore, a month-on-month (MoM) analysis highlights a 16% contraction in sales, based on the provided data.
