Due to severe blows from the US Dollar’s appreciation, logistical costs, tax rate increases, and the nation’s overall economic instability, Pakistan’s automobile sector is on the verge of collapse.
The State Bank of Pakistan (SBP), according to sources, is delaying the letter of credit (LC) approval for CKD imports, which is resulting in a drop in production and delivery delays. Due to these problems, Toyota (IMC) started observing non-production days (NPDs) in order to save operating expenses and make adjustments to the current situation.
According to a recent source, Kia Lucky Motor Corporation Limited (KLMCL) and Honda Atlas Cars Limited (HACL) have similarly chosen to reduce car assembly by switching to single-shift operations. It says that Pak Suzuki Motor Company (PSMC) will start observing NPDs in August.
Toyota have planned to close its production:
According to reports, Toyota Indus Motor Company (IMC) is permanently ceasing production in Pakistan as a result of the current financial crisis. Toyota IMC will refund clients who paid in advance for reservations because the business is unable to complete those orders, according to the specifics.
As one of the primary causes of production interruption, which also caused a backlog of orders, Toyota IMC previously claimed restrictions on the approval of Letter of Credits (LCs) by the State Bank of Pakistan (SBP) for the import of Completely Knocked Down (CKD) kits.
These actions are likely to make the delivery delay problem worse, which could negatively impact automobile sales in the days to come. While the current situation continues to cost car firms millions of rupees in revenue and cause thousands of employees to lose their jobs, the coalition government is currently silent.
The State Bank of Pakistan (SBP) has prohibited the opening of Letters of Credit (LCs) in an effort to close the trade deficit, which has caused certain companies to halt production operations. This restriction has had an impact on the automobile industry.