Due to supply chain restrictions caused by imports and unclear production outlooks, Pak Suzuki Motor Company has temporarily stopped accepting new motorbike orders.
The manufacturer stated in a statement to its dealers on Thursday that “we are unable to serve new customers” due to the current economic climate, import-based supply chain restrictions, and unpredictable manufacturing possibilities.
As a result, the corporate notice stated, “We have temporarily stopped bookings for our motorbike products as of January 20, 2023.” Bookings will continue, though, as soon as the environment is suitable for accommodating new clients.
Analysts, who questioned the purpose of accepting new orders when numerous plants had been closed and no raw materials were being imported, could not have been surprised by the decision.
“I wouldn’t be surprised if car bookings are also halted; plants are closed with restrictions on import of raw material, so what is the point of taking new orders,” said Wasil Zaman, an auto analyst at JS Global.
“The problem is arising due to the rupee’s depreciation and curbs on opening Letters of Credit (LCs),” pointed out Sabir Shaikh, Chairman of the Association of Pakistan Motorcycle Assemblers (APMA).
He expressed hope that once the LC issue was handled, firms would be able to resume production and sales, citing the State Bank of Pakistan’s (SBP) guarantees that US dollars will be accessible in the upcoming weeks.
Tahir Abbas, Head of Research at Arif Habib Limited, observed that “foreign currency reserves have only increased by $258 million after declining $3.6 billion in the last eight weeks.”
The overall foreign exchange reserves of Pakistan are currently $10.4 billion, up $256 million. SBP’s reserves currently total $4.6 billion, an increase of $258 million, while commercial bank reserves total $5.8 billion, a decrease of $2 million. Only a few weeks worth of imports could be covered by those reserves, he claimed.
“Unavailability of completely knocked down (CKD) parts and the fluctuating exchange rate are preventing enterprises from determining the price of their goods.”
Although businesses were not able to secure CKDs and meet production costs, the situation might be clear in the next two weeks, stated Sabir Shaikh. Production by the Chinese bike assemblers, who dominate the market, has already decreased by 50% to 80% while some firms have shut down completely.