Pak Suzuki has once more indicated that it will halt production for a further two days due to the unstable business situation and inventory supplies. In a statement, the business informed Pakistan Stock Exchange (PSX).
The auto manufacturer claimed in the filing that the State Bank of Pakistan’s (SBP) requirement that certain HS codes, including Completely Knocked Down (CKD) kits, needs prior approval for importation had “adversely impacted the clearance of import consignment which resulted in affected inventory levels.”
Non-Production Days in September
On September 8 and 9, 2022, the company will observe non-production days. It is important to note that Suzuki suspended manufacturing last month on 18 and 19, followed by 22 through 26, and then again on 29 to 31 August.
This indicates that only 12 days were produced by the company’s cars in August. However, on the other side, bike production is still in full swing.
Ban on CKD Kits
The government put a ban on the import of both necessary and luxuries goods, including automobile CKD kits, in May of this year. The action was performed as part of an economic emergency strategy. Although the government has lifted the restriction, the problem with CKD kits continues.
Because of a similar situation, Pak Suzuki decided to cease automobile reservations starting on July 1, 2022, even though reservations were still accepted for a limited number of models.
For the same reasons as Suzuki, other businesses such as Toyota Pakistan and Honda Atlas also declared non-production days. The state bank has been encouraged by the enterprises to streamline the procedure so that the kits may be delivered on time.
The consumers’ purchasing power will be severely impacted if the production problem persists. If there is no production, there will be no deliveries or delays. We are all aware of how costs have increased over the past two years, which results in the consumer having to make an additional payment when purchasing a car.
Pak Suzuki Observes Lowest Sales Since COVID: Report
On the other hand, with sales at a two-year low for Pak Suzuki Motor Company, the decline in auto sales is still unabated.
According to an update from Autojournal.pk, the Pak Suzuki sold slightly fewer than 4,000 units in August 2022. Since May 2020, this is the company’s worst month for sales in comparison with peak Covid-19 time.
As a result, Pak Suzuki revenues decreased by 75% month over month (MOM). The lack of approval of the letter of credit (LC) for the clearing of CKD kits and limits on imports into the auto sector are the main causes of the decline.
Therefore, in order to deal with the ongoing inflation, this issue led the auto industry to reduce production. Lastly, further factor in the reduction in demand is the recent price increases due to exchange rate. Although the company did reduce the price when dollar came back at 212, but it was just a fraction of what they had increased.