Inventory shortages force Pak Suzuki to halt car production

WEB DESK: In a recent development, Pak Suzuki Motor Company (PSMC) has issued a notice to the Pakistan Stock Exchange (PSX) regarding the temporary closure of its automobile production plant.

The shutdown, scheduled from October 25, 2023, to October 27, 2023, has been attributed to a shortage in inventory levels.

This decision, made by the company’s management, comes amidst recurring challenges faced by the Japanese automaker throughout the year. PSMC has experienced multiple shutdowns, with the most recent closure of its motorcycle plant extending until September 15.

These disruptions were primarily caused by a lack of raw materials, compelling the company to suspend operations in August, June, and May.

PSMC’s financial woes have been further compounded by a drop in sales and elevated financing costs. The company reported significant losses amounting to Rs9.68 billion in the initial six months of FY2022-23.

Consequently, PSMC has been compelled to assess strategic options, including a potential delisting from the PSX. This decision stems from the majority shareholder’s expressed interest in acquiring all outstanding shares of the company.

Read more: Declining sales may force Pak Suzuki to exit stock market

It is crucial to note that the challenges faced by PSMC are not unique; the entire auto sector in the country has been severely impacted. The government’s stringent measures to curtail imports and restrict Letter of Credit (LC) issuance have substantially affected the sector.

Additionally, soaring finance costs and substantial hikes in car prices have dampened consumer demand significantly.

Indus Motor Company (IMC), responsible for assembling Toyota vehicles in Pakistan, has also felt the pinch of these challenges. IMC recently declared a month-long shutdown of its production facilities, citing similar inventory shortages.

As the industry grapples with these difficulties, stakeholders are closely monitoring the situation, hoping for a resolution to revive the once-thriving automobile sector in Pakistan. Stay tuned for further updates on this evolving situation.