The local auto industry is suffocating due to severe foreign exchange shortages and parts supply issues.
On Thursday, Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) sent a joint letter to the State Bank of Pakistan (SBP) Governor Jameel Ahmed.
The letter stated that the industry is on the brink of extinction due to SBP’s restrictions and banks’ lack of cooperation in auto sector imports. As a result, factories are facing intermittent closures while assemblers and vendors are laying off workers.
The letter warned that, if corrective measures are not taken, this scenario will result in massive unemployment, government revenue loss, auto assembly plant closures, and capital flight. It added that the industrial breakdown was caused by direct and indirect influences on the issuance of the letter of credit (LC).
According to the Pakistan Bureau of Statistics (PBS), car assembly kit imports fell 38% to $499 million in H1 FY2022-23, from $808 million in the same period last fiscal year. This has created an inventory shortage and massive sales and profit decline for automakers.
Citing these facts, both associations urged the SBP governor to abolish the import restrictions to ensure the auto sector’s survival.
