Indus Motor Company Limited (INDU), the assembler and seller of Toyota-brand vehicles in Pakistan, has once again decided to shut production from March 24 to March 27, citing raw material and component shortages.
The automaker informed the Pakistan Stock Exchange (PSX) of the situation in a notice on Friday.
According to Indus Motor, challenges with commercial banks’ inability to open Letters of Credit (LCs) for raw materials have made it difficult for the company and its suppliers to import raw materials and receive approval for their exports.
The company’s supply chain has been interrupted, and its suppliers are unable to provide raw materials and components to the business. The company cannot continue its production activities as a result of insufficient inventory levels to maintain production, according to the notice.
“The company has decided to completely shut down its production plant from March 24 to March 27 (both days inclusive),” it says.
This is the second manufacturing closure notification made by Indus Motor this year. The company had previously planned a complete shutdown of its facility from February 1 through February 14, citing a lack of inventory.
Due to a production decline expected in February and March, it offered its customers a complete refund with interest last month.
Pakistan’s auto industry, which is heavily reliant on imports, has been caught in a crisis as the State Bank of Pakistan (SBP), following unabated rupee depreciation, imposed restrictions on the opening of LCs.
CEO Ali Asghar Jamali had stated back then that the restrictions on CKD kits as one of the major issues impacting the auto sector, causing manufacturers to only operate at 40-45% of their capacity.
Due to limits placed by the State Bank of Pakistan (SBP) on the opening of LCs as a result of the continuing depreciation of the rupee, Pakistan’s auto industry, which is heavily dependent on imports, is currently experiencing a crisis. Operating challenges are being faced by industries as a result of the nation’s low foreign exchange reserves.
The central bank agreed to remove the import restrictions back in January.
According to the SBP, Authorized Dealers (ADs) may prioritize or facilitate imports in the following categories: imports of critical goods, imports of energy, imports by industries with a focus on exports, imports of inputs for agriculture, imports with delayed payment or self-funded financing structure, and imports for export-oriented projects that are almost finished.
However, import restrictions due to dollar shortage are still hampering many industries including the auto sector.