Auto manufacturers in Pakistan are facing ongoing challenges with inventory and parts shortages. Honda is the latest company to announce a shutdown of its manufacturing plant due to these issues. The shutdown will last for one week, from October 24 to October 31, with the possibility of changes to the plan.
This isn’t the first time Honda has had to suspend production due to inventory issues. They previously halted manufacturing from March to May. Similarly, Toyota Indus Motor Company (IMC) also announced a production shutdown, which will continue until November 17.
One key reason behind these shutdowns is the fluctuation in the exchange rate between the US dollar and the Pakistani rupee. The exchange rate improved from Rs. 307 per US Dollar to Rs. 280. Since the auto industry heavily relies on imports, this is expected to lead to lower car prices once production resumes, assuming the exchange rate remains stable.
The auto sector in Pakistan is facing additional challenges, including government restrictions on imports and LC issuance, higher finance costs, and substantial increases in car prices, all of which have reduced demand. In the first quarter of FY24, the auto sales in Pakistan stood at 20,983 units, a significant drop of 40% compared to the same period the previous year.
In summary, Honda and Toyota have joined the ranks of Pakistani auto manufacturers grappling with inventory and part shortages. These challenges are forcing production shutdowns and may ultimately result in lower car prices as the exchange rate stabilizes.