Suzuki announces plant shutdown again 

LAHORE: Pak-Suzuki Motor Company (PSMC) has notified the Pakistan Stock Exchange (PSX) that it will shut down its automobile plant from October 19 to October 21. 

The company has attributed its decision to prevailing administrative oversight by the State Bank of Pakistan (SBP) on the import of completely-knocked-down (CKD) kits. PSCM’s motorcycle plant will, however, remain operational. 

PSMC, Pakistan’s largest car manufacturer by sales volume, has been encumbered for the majority of this summer with non-production days (NPD) which have culminated in the announcment of its seventh production shutdown since August. It had previously halted production from August 18 to August 19 , August 22 to August 26, August 29 to August 31, September 6 to September 9, and September 19 to September 23. 

The motor company has placed the blame completely on SBP. This issue erupted earlier this June when the central bank sought to curb the outflow of forex by restricting imports of CKD kits needed to assemble cars. One of the issues that the persistent NPDs have created is that they have exacerbated the demand destruction in the car industry. Customers that persist and endeavor to purchase cars despite the significant price increases in 2022 are subject to egregiously long wait times, and subsequently on-premiums. 

In terms of the demand destruction that NPDs have exacerbated, the company saw a month-on-month (MoM) decline of 58 per cent and 41 per cent in sales during July and August, respectively, based on the data they released to the Pakistan Automotive Manufacturers Association (PAMA). Its best selling model, the Alto, also saw a 50 per cent MoM contraction in August. The company’s two month sales for FY23 are 61 per cent lower than FY22 for a total of 16,610 fewer units sold. 

Moreover, PSMC’s contemporaries in the Big 3, Toyota Indus Motor Company (IMC) and Honda Atlas Cars Pakistan Limited (HACPL) have also suffered with HACPL having announced a week long production shut down last week. 

PSMC has, however, undoubtedly fared far worse than its other two contemporaries with no end in sight for either the company nor the rest of the industry as to when the SBP’s measures on CKD imports will loosen.