The Indus Motor Company, responsible for the assembly of Toyota vehicles in Pakistan, has decided to halt its production operations from August 25 until September 6.
The reason cited for this temporary suspension is a notable decline in demand, attributed to reduced purchasing power among consumers.
The company’s announcement regarding this development was disclosed through an official communication to the Pakistan Stock Exchange (PSX) on Thursday.
During the fiscal year 2022-2023, the auto industry faced persistent challenges due to an unfavorable economic landscape, characterized by diminished consumer buying capacity and an upswing in taxes and duties imposed by the federal government.
The culmination of these factors has led to a consistent downturn in the demand for automobiles.
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Given the prevailing circumstances of sluggish demand and manageable inventory levels, the company has decided to initiate a temporary shutdown of its production plant. The shutdown is scheduled to span from Friday, August 25 up to and including Wednesday, September 6.
Despite the last-minute agreement with the International Monetary Fund (IMF), both industries and consumers in Pakistan remain entangled in the financial hardships that were previously confronted.
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.
