Indus Motor shuts down plant for another 12 days

Karachi: Indus Motor Company Limited has decided to completely shut down its plant from August 25 to September 06, 2023, amid supply chain disruptions on Thursday.

The IMC management announced that its production will be suspended from August 25 to September 6 due to "delay in opening of Letters of Credit (LC) and inventory shortages" in a letter addressed to the general manager of the Pakistan Stock Exchange (PSX).

As a result, the company lacks insufficient inventory levels and is unable to resume manufacturing.

This development comes after the firm announced that its plant would be shut down entirely from July 21 to August 3, 2023.

Due to a difficult economic climate, limited consumer spending power, and an increase in government fees and taxes in the fiscal year 2022-2023, demand for the auto industry has been steadily declining.

Numerous enterprises representing diverse sectors – such as Sitara Peroxide and Pak Suzuki Motor Company – had earlier revealed their decisions to halt production, citing a range of factors encompassing demand fluctuations to limitations in the supply chain.

Of particular note is the automotive sector within the country, which confronts a series of economic challenges. These include the industry’s ongoing struggle to secure necessary Letters of Credit (LCs) for import operations.

In addition to the issues linked with LCs, the sector grapples with waning consumer demand, attributed to elevated pricing structures and historically high interest rates. The added depreciation of the local currency, the rupee, further exacerbates the situation.

The first month of the fiscal year 2023-24 observed a staggering 57% year-on-year (YoY) reduction in car sales, as reported by the Pakistan Automotive Manufacturers Association (PAMA).

For the month of July, the combined sales from registered car manufacturers under PAMA amounted to a modest 5,092 units.

Furthermore, a month-on-month (MoM) analysis highlights a 16% contraction in sales, based on the provided data.