Thursday Jan 19, 2023
Following back-to-back closures of its car assembling plants owing to an ongoing inventory crisis, Pak Suzuki Motor Company (PSMC) Thursday announced it had stopped booking motorcycles until further notice in view of procurement and production problems.
Booking suspension would take effect from Friday, the automaker said.
“Under the present economic circumstances, import-based supply chain constraints and uncertain production possibilities, we are unable to serve new customers,” the company said in a letter to dealers.
“We will, therefore, stop bookings of our motorcycle products from January 20, 2023, for the time being. However, bookings will resume as the situation becomes favourable to serve fresh customers.”
Pakistan's economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, but devastating floods and a global energy crisis have piled on further pressure.
A shortage of imported parts and materials has put brakes on almost all industries including auto, forcing an alarmingly high number of companies to shut down their operations.
Thousands of containers packed with essential food items, raw materials and medical equipment have been held up at Pakistan's Karachi port as the country grapples with a desperate foreign exchange crisis.
A shortage of crucial dollars has left banks refusing to issue new letters of credit for importers, hitting an economy already squeezed by soaring inflation and lacklustre growth.
Pakistan’s forex reserves held with the State Bank of Pakistan (SBP) dropped to $4.6 billion — enough to cover barely four weeks’ worth of imports.
The government has also restricted several imports to save dollars, and some businesses have shut down as a result of being unable to import machinery or parts.
Last week, the PSMC, once again extended its closure till January 20 owing to inventory shortages.
The production activities of the automobile company have remained suspended for most days since the start of the new year, blaming a dearth of imported parts and accessories, as banks are rejecting or retiring letters of credit (LCs) amid US dollar scarcity, exchange rate crisis, and fast-depleting foreign reserves of the country.
“Due to continued shortage of inventory level, the management of the company has decided to extend the shutdown of automobile plant from January 16, 2023 to January 20, 2023," PSMC stated in an announcement to the Pakistan Stock Exchange (PSX).
It was the third consecutive announcement by the company of keeping breaks at its production activities in 2023. PSMC welcomed the new year with a notice that it would observe non-production days from January 2 to January 6, having been affected by import curbs pushed by non-issuance of letters of credit.
The central bank had introduced a mechanism for prior approval for import under "HS code 8703 category (including completely knocked down-CKDs) vide circular No. 09 of 2022 dated May 20, 2022", the company said in a note to PSX then.