No Alto, no WagonR: Suzuki shuts shop in Pakistan temporarily. Here’s why

  • Pak Suzuki will keep its motorcycle and four-wheeler facilities closed from June 22 to July 8.
Suzuki Alto on sale in Pakistan
Suzuki Alto on sale in Pakistan

Japan's Suzuki Motor, in a stock filing, has said that it is shutting down its factory in Pakistan temporarily due to lack of parts and accessories, Dawn reported. It has attributed this to a mechanism introduced by the State Bank of Pakistan (SBP) in May of 2022, which mandates taking prior approval for the import of completely knocked-down (CKD) kits. The OEM has said that this system has “adversely affected" the clearance of consignments, thus resulting in low inventory levels.

Pak Suzuki will keep its motorcycle and four-wheeler facilities closed from June 22 to July 8. Earlier, the company had kept its plant shut for 75 days, from August 2022. Suzuki sells models like Alto, WagonR and Swift in the country. The company sold 2,958 vehicles in May of 2023 as compared to 1,474 units sold in April this year. However, sales saw a steep fall of 54% to 62,354 units in FY23 from 134,270 units in the same period of last fiscal.

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The curb on opening fresh Letter of Credit (LC) by SBP has “adversely affected" import of completely knocked-down kits by local assemblers, which fell by 54% to $712 million in FY23 from $1.558 billion in the same period last fiscal.

Further, the auto industry in Pakistan has seen a hit due to slowing down of auto financing. The interest rate has been increased to 21% now from 7% in March. This has further reduced demand for four-wheelers in the market. Thus, shrinking of sales is another reason why car assemblers have resorted to plant shutdowns. This has in turn affected employment of people, both directly and indirectly, especially in the vending units.

As per analysts, car sales through bank financing in Pakistan are expected to remain on a fall for the next six months as no new auto loans are being offered.

First Published Date: 20 Jun 2023, 15:22 PM IST
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