Toyota, Suzuki cancel car bookings, shut down production in Pakistan
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Pakistan’s two leading car assemblers, Toyota and Suzuki, plan partial plant shutdowns from next month due to unavailability of raw material amid import restrictions and exchange rate volatility, officials at both companies said.
The Toyota company has now been offering refunds to customers facing delays and mark-ups on their payments, with deliveries likely to be delayed by at least three months and prices to be revised as the country does not have dollars available.
“There will be 10 working days next month, only if central bank allows us to open letter of credit based on the quota they promised,” Ali Asghar Jamali, chief executive at Indus Motor Company Ltd (INDM.PSX) which assembles Toyota vehicles in Pakistan.
"Restrictions had adversely impacted clearance of import consignments from ports," the head of public relations for Pak Suzuki Motors, Shafiq A Shaikh, said.
He said the unavailability of materials may result in a plant shutdown in August. "If the same situation continues, then from August 2022 we have big problems," Shaikh said.
According to the data of Pakistan Automotive Manufactures Association, the sale of locally assembled cars in Pakistan surged by around 50% from July 2021 to May 2022 compared with the same period of the previous year.
The move has had a cascading effect on industries that rely on imports to complete finished goods as they say the central bank has delayed the clearance of letters of credit with banks facing a shortage of dollars, affecting their ability to import materials.
Reserves with the central bank have fallen to as low as $9.3 billion, enough to cover less than two months of imports.
The current account deficit for the last financial year touched 5% of GDP with imports hitting record highs.