Citing inventory shortages, Pak Suzuki has once again announced the extension of its plant shutdown from 9th January 2023 to 13th January 2023, according to the notification the company sent to the Pakistan Stock Exchange (PSX). However, Suzuki’s motorcycle plant will remain operative.
Earlier, Suzuki’s plant remained shut for a period from 2nd January to 6th January 2023 due to a shortage of inventory level. Since August 2022, the company has announced the Non-Production Days (NPDs) schedule nearly a dozen times with NPDs already exceeding 35 days as of putting down this article.
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According to a Pak Suzuki spokesperson, the company was facing a critical time due to import restrictions and also no future information on how much more time the issues would continue. He said:
“Detention, demurrages, and kibor+3 percent are really hurting our industry.”
The spokesperson stated that dealerships and vendors were also disturbed by reduced sales and production. He requested the government to have a discussion with the industry to solve the matter on an urgent basis.
The State Bank of Pakistan (SBP) had introduced a mechanism, for obtaining prior approval for imports of CKD. These restrictions had adversely impacted the clearance of import consignment which resultantly affected the inventory levels. Although SBP announced the withdrawal of restrictions on imports effective from 2nd January 2023, however despite the removal of the restriction, it isn’t smooth sailing for all importers.
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Authorized dealers are asked to prioritize or facilitate imports under essential imports, energy imports, imports by export-oriented industry, imports for agriculture imports, deferred payment/self-funded imports, and imports for export-oriented projects near completion while needing to keep the customers’ risk profile along with the liquidity position in the FX market before processing.
Furthermore, according to Munir Bana, Chairman of the Pakistan Association of Auto Parts & Accessories Manufacturers (PAAPAM):
“We import raw materials to make spare parts for the auto industry. However, the auto industry is not an essential item and therefore our imports will continue to be controlled and rationed by SBP.”
The SBPs circular still leaves room for opacity, and subsequently leaves many onlookers from the automotive sector in the dark, Munir Bana added. Even if the CKD kits can be imported, if parts manufacturers are unable to subsequently import the requisite components then the downward effect on lead times across the industry will remain limited.
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Passenger car sales decreased by 39% in the first 5 months of FY2023 to 55,144 units, against 90,303 units sold in the same period last year, according to Pakistan Automotive Manufacturers Association (PAMA). With an exception of the Suzuki Alto, sales of all other variants of cars, trucks, buses, tractors, jeeps, pick-ups, and 2- and 3-wheelers suffer from a constant decline in sales.
A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com