Toyota And Suzuki Temporarily Stopped Their Production

Toyota Indus Motor Company and (PSMC) Pak Suzuki Motor Company still have issues to resolve after the government lifted the import ban. The corporation has announced a new production reduction has been implemented and will last for the Next several days.
Toyota was the first one Who Stopped Production Activities for a Short period Cause after The government lifted the import prohibition, The Toyota Indus Motor Company still had unresolved issues. So they stated that the fresh production cut will be in effect in the upcoming days, the company notified in a statement.

Unrest has been triggered in the car industry by restrictions on the issuance of letters of credit for the import of parts amid exchange rate volatility. Some assemblers hinted at the slowdown of the production of cars while previously Some Companies also offered refunding reservations to customers irate about late delivery concerns.

Due to the shaky economic climate, several assemblers have also chosen to take non-production days (NPDs) this month and in August.

Leading to problems in the receipt of imported parts and impending price rises brought on by the rupee’s depreciation, assemblers have been having a difficult time timely turning over the keys to their customers.

What forced Toyota to suspend its production?

In response to a new method for CKD import permission from the State Bank of Pakistan, the business has just announced that it would cease manufacture and any associated assembly of its automobiles from September 1–14. (SBP).

Following the company’s notification, the new mechanism introduced some obstacles to the importation of CKD Kits, which is contributing to inventory issues.

The notice added the following information:

The corporation has decided to temporarily suspend manufacturing since there aren’t enough inventory levels to keep up with demand. The business has decided to temporarily halt manufacturing from September 1 through September 16, 2022, in light of the aforementioned factors. The production plan will be disclosed if there are any changes as a result of permission requests, though.

The newly established process from the SBP has exacerbated the current situation, which already includes the new capital value tax (CVT), limits on vehicle financing, higher withholding tax on filers and non-filers, price increases, high-interest rates, and the non-issuance of State Bank of Pakistan notes.

Notably, this is not the first time a vehicle manufacturer has announced a reduction in output. Nearly all automakers did this in the past.

When letters of credit were not issued, the automakers stopped taking reservations and reduced output (LCs). The State Bank of Pakistan delayed issuing LCs for CKD kits, which led to the suspension of local auto assembly.

Suzuki is on the second list Who also halted the production Should We expect from Honda too?

(PSMC) Pak Suzuki Motor Company has once more indicated that it would cut production for a further two days due to the uncertain economic climate and inventory supplies. In a statement, the corporation told Pakistan Stock Exchange (PSX).

The vehicle producer claimed with inside the submission that the State Bank of Pakistan’s (SBP) requirement that sure HS codes, together with Completely Knocked Down (CKD) kits, require previous clearance importation had “adversely impacted the clearance of import consignment which ended in affected stock levels.”

The organization has said that it will consider non-manufacturing days from September 8 and 9, 2022. It is important to note that Suzuki paused production last month on January 18 and 19 too, followed by January 22 through January 26, then from January 29 to January 31. This demonstrates that in August, the company continued production for only just 12 days. Motorcycle manufacturing is still going on continuously in the meantime.

The government put restrictions on the importation of both necessary and luxuries goods, including automobile CKD kits, in May of this year. The action was performed as part of an economic emergency strategy. Although the government has lifted the restriction, the problem with CKD kits continues.

Because of the same situation, Pak Suzuki decided to cease automobile reservations starting on July 1, 2022, even though reservations were still accepted for a limited number of models.

For the same reasons as Suzuki, other businesses such as Toyota Pakistan and Honda Atlas also observed non-production days. The state bank has been encouraged by the enterprises to streamline the procedure so that the kits may be delivered on time.

The customers’ purchasing power would be severely impacted if the manufacturing problem persists. If there is no manufacturing, there will be no deliveries or delays. We are all aware of how costs have increased over the past two years, which results in the customer having to make an additional payment when purchasing a car.

Will Honda and other Auto manufacturing companies also going to suspend the production of their vehicles?
Like most companies Honda also suffered a sales decline of their cars after the price hikes of their cars, unlike the high demand of Toyota and Suzuki in Pakistan, where Toyota and Suzuki need high stocks of the kits in the inventory, Honda is also a big player, and there might a little probability of atlas suspend the production Honda cars but due to lesser sales than the Toyota and Suzuki, it might be possible that the Honda has some stock in their inventory, So Atlas Honda Pakistan might not suspend the production their cars.
According to our point of view, the main reason for inventory shortage could be the huge number of booking that some companies were talking ruthlessly, even though Previously a government official also questioned from the car manufacturer regarding this issue.
Previously An carmaker who was present at the PAC meeting claimed that the government had questioned the vehicle assemblers about why they were taking such a large number of client reservations if they couldn’t deliver the vehicles on schedule.

The firms, on the other hand, have been ruthlessly passing through the effects of the dollar’s appreciation versus the rupee. If a customer purchases one of the vehicles whose bookings are still open, the delivery period has often ranged from two months to ten months.

What do you think of the days when there is no production? What might be the consequences? Please leave your thoughts in the space below.