Honda shuts plant till March end

Attributes closure to LC restrictions, halt to foreign payments

ISLAMABAD:

Honda Atlas Cars Pakistan Limited (HCAR) has decided to temporarily close its plant from March 9 to 31 due to supply chain disruptions.

In a notice to the Pakistan Stock Exchange (PSX), the auto giant announced that government’s restrictions on importing completely knocked down (CKD) kits, raw material and the halt to foreign payments had disrupted the supply chain and it was unable to continue operation in such an adverse situation.

“Considering the current economic situation whereby the government has resorted to stringent measures including restricting the opening of Letters of Credit (LCs) for import of CKD kits, raw materials and halting foreign payments, the company’s supply chain has been severely disrupted by such measures,” the notice stated.

“As a result, the company is not in a position to continue with its production and ultimately has to shut down its plant from March 9, 2023 to March 31, 2023.”

The government’s strict measures to save foreign exchange and reduced market demand have forced several automakers either to completely close down or opt for partial shutdown.

Pakistan’s foreign exchange reserves are currently very low and the government is trying to convince the International Monetary Fund (IMF) to revive the Extended Fund Facility (EFF) for the release of over $1 billion in loan tranche.

Recently, Pak Suzuki Motor Company resumed booking for its two-wheelers after closure for around one and a half month. “With respect to the circular sent on January 20, 2023 for closure of bookings for Suzuki motorcycle products, we are now pleased to resume booking of 2W products from tomorrow, ie March 3, 2023 on allocation basis,” the company announced.

As per latest data, Pakistan’s car sales, including sales of non-Pama members, came in at around 11,500 units in January 2023, down 37% month-on-month primarily led by Pak Suzuki due to the unavailability of CKD parts.

Published in The Express Tribune, March 9^th, 2023.

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