Pakistan’s economy continues to face challenges with the Rupee’s value hitting a new low. The country’s auto industry, which heavily relies on imports, is particularly struggling.
Even the “BIG 3” car makers, including Honda Atlas, are facing dwindling sales, low production, and substantial losses.
In a notification, Honda Atlas Cars Limited announced another production shutdown until May 15. The reason is the same as before, as import curbs imposed by the State Bank of Pakistan (SBP) have led to zero inventory and disrupted supply chains.
This latest shutdown follows previous ones that ran from March 9 to March 31 and then from April 1 to 15.
The most recent communication informed us that the shutdown would remain in place from May 1 to May 15.
This means that by the end of the shutdown, it will have been two months since the company’s production was last operational. This situation will further exacerbate the already declining sales and production charts.
According to a report from the Pakistan Automotive Manufacturers Association (PAMA), sales of the Honda Atlas fell 49% in March compared to February.
In contrast to the previous month’s 1,636 unit sales, the company only sold 835 units in March. 611 of the sold units were City and Civic models, with the remaining units being BR-V and HR-V models.
PSMC, Pakistan Suzuki Motor Company, is also having financial issues. The company’s first quarter of 2023 saw the highest loss it has ever reported, with a loss after tax (LAT) of Rs. 12.91 billion.
The high finance cost, which includes exchange loss, a markup for late delivery, and demurrage and detention fees, is blamed for the loss. It was up 12 times year on year and three times quarter on quarter to Rs. 12.8 billion.
PSMC is one of the country’s largest automobile manufacturers, providing employment to a significant portion of the population.
Due to the company’s current financial situation, employees may lose their jobs or see their pay reduced, which will have a negative impact on the economy of the nation.
The current difficulties facing the auto industry are a sign of the more serious economic problems Pakistan is currently facing, which demand urgent attention from decision-makers.