Auto manufacturers reeling from informal quota  

Manufacturers face heightened risk amidst economic uncertainty and limited quota allowance

LAHORE: Automobile manufacturers in Pakistan are currently utilizing ad-hoc measures to continue operations amidst the economic downturn and the limited quota allowances given to them. 

“The State Bank has given interim relief by allowing 50% of imports based on our monthly average imports in March, April, May, and June.” said Maqsood Ur Rehman Rehmani, Vice President and Company Secretary at Honda Cars Pakistan Limited, to Profit. 

Honda and Suzuki are both endeavoring to hammer out better terms with the State Bank to avoid a prolonged halt in operations. Toyota, however, has taken a separate route entirely and offered customers the option of full reimbursements or renewed delivery terms. 

The limited quota does provide respite but its terms are not as beneficial as automotive companies would like. 

“The industry was already suffering from the higher cost of importing integrated circuit (IC) chips due to a global chip shortage and then the import restrictions were imposed. Everyone has to pay demurrage on our cargo stuck at the ports, which is made worse due to higher container detention charges because of a container shortage. Manufacturers have utilized their ckd reserves to meet orders, however, if the conditions persist then I am unsure how everyone in the industry will survive” said Maqsood 

The government is poised to possibly provide some relief to importers in the near future. However, whether automotive manufacturers will benefit from any possible changes in the import regime is unknown and will only be understood in the weeks to come. 

 

Daniyal Ahmad
Daniyal Ahmad
The author is a member of the staff, and covers the automobile, energy and advertising insdusties as a sector analyst. He can be reached at [email protected]

Must Read

Pakistan’s 5G spectrum auction likely in March 2025

Standing Committee on IT & Telecom urges Ministry of IT&T to ensure quality 5G services post-auction and incentivise infrastructure improvements