Honda Atlas Cars Limited (HACL) is stopping production from October 4 to October 11, 2022. In a notice to the Pakistan Stock Exchange (PSX), Honda Atlas cited supply chain issues stemming from the government’s sanctions on imports and the deteriorating economy.
The notice reads:
In light of the country’s current economic situation, the government has implemented stringent measures, such as limiting the import of CKD kits and raw materials. These measures have disrupted the company’s supply chain. As a result, the company must also rationalise its production and ultimately close its plant from October 4, 2022 to October 11, 2022.
Since July, Pakistan’s auto industry has been facing production cuts and delivery delays due to import restrictions. Toyota IMC has also offered customers to cancel their bookings and receive full refunds with a markup.
Due to its heavy reliance on imports, the auto industry is also feeling the effects of the Rupee devaluation. The State Bank of Pakistan’s (SBP) restrictions on the Letters of Credit (LC) is causing import delays and inventory rate hikes.
The companies are observing non-production days (NPDs) due to a shortage of parts and an economic slowdown. This resulted in a decline of 50% in total car sales year-over-year in July-August, to 19,358 units, down from 38,568 units a year earlier, according to Business Recorder.
Analysts reckon that the situation will worsen further until the economy stabilizes, which may not happen until the 2nd quarter of 2023. The situation has also stalled all plans for new car launches in Pakistan as automakers struggle to stay afloat.