Karachi, November 8, 2023 – Suzuki Pakistan has announced a temporary halt in car production, citing inventory shortages as the primary reason.
In a communication shared with the Pakistan Stock Exchange (PSX), Pak Suzuki Motor Co. Limited revealed that its automobile plant will be closed from November 9, 2023, to November 14, 2023, while the motorcycle plant will continue its operations.
The decision to suspend car production comes as the company grapples with a challenging business environment, which has persisted for several months. This challenging landscape is the result of unfavorable economic conditions and various restrictions that have impacted the automobile industry.
One of the major contributing factors to the downturn in the automobile industry is the decline in sales volumes that began in the latter half of 2022. The decline can be attributed in large part to import restrictions imposed by the State Bank of Pakistan (SBP) on the import of completely knocked down (CKD) units of vehicles. These restrictions severely hampered production throughout 2023, leading original equipment manufacturers (OEMs) to implement ‘Non-Production Days (NPDs)’ to cope with the situation.
Although import restrictions were lifted in June 2023, the industry’s challenges shifted from supply constraints to demand-side issues. During the period of January to September 2023, the sales volume for cars and light commercial vehicles within the auto industry dropped significantly, with only 63,745 units sold compared to 177,763 units during the same period in the previous year – marking a massive 64% decline. Suzuki Pakistan, in particular, experienced a 70% decline in sales volume, dropping from 94,215 units to 27,935 units. Despite the challenges, the company maintained a market share of 44% for cars and light commercial vehicles among Pakistan Auto Manufacturers Association (PAMA) member companies and utilized only 27% of its production capacity, producing 30,142 units during the current period.
In the motorcycle sector, the organized market represented by PAMA member companies also faced a decrease, with sales volumes dropping from 1,177,360 units to 828,124 units. This decline of 349,236 units accounts for a 30% drop in sales volume compared to the same period last year. Suzuki Pakistan reported a sales volume of 12,287 units, down from 29,823 units in the corresponding quarter of the previous year, signifying a 58% decline. The shortage of components significantly impacted motorcycle production and, consequently, sales volume.
Suzuki Pakistan’s decision to halt car production is a response to the complex economic conditions and supply constraints that have plagued the automobile industry. As the company and the industry as a whole continue to navigate these challenges, a strong focus on adaptation and innovation is crucial for ensuring a sustainable future.
