Pakistan’s Toyota manufacturer shuts down plant for two weeks

Toyota's logo is seen at the Toyota Society Motors showroom on July 27, 2022 in Karachi, Pakistan.  - Reuters
Toyota’s logo is seen at the Toyota Society Motors showroom on July 27, 2022 in Karachi, Pakistan. – Reuters
  • The plant will remain completely closed from July 21 to August 3.
  • The company faces major constraints in importing raw materials.
  • It is not only automotive manufacturers that are affected by the shortage of raw materials.

KARACHI: Indus Motor Company Limited, a major player in Pakistan’s automotive industry and manufacturer of Toyota vehicles, has temporarily shut down its production plant for two weeks. news Reported on Friday.

The decision comes as the company is facing significant constraints in importing raw materials, causing disruption in its supply chain.

Last month, Indus Motors had to temporarily shut down its production plant due to similar challenges of importing raw materials.

However, the current situation has worsened, leaving the company with insufficient inventory levels to sustain its production activities.

The company secretary of Indus Motor issued a statement to the Pakistan Stock Exchange, outlining the difficulties faced by the company and its vendors in importing raw materials and clearing consignments.

These challenges are mainly due to initial letters of credit (LCs) and supply issues from some overseas vendors.

As a result of these constraints, the company has no option but to temporarily halt its production activities.

The plant will remain completely closed from July 21, 2023 to August 3, 2023. Indus Motors is not the only automotive manufacturer affected by the shortage of raw materials.

Other major companies such as Pak Suzuki Motors and Honda Cars have also faced multiple shutdowns in recent months due to similar issues.

The automotive sector, along with other industries dependent on imported raw materials, is grappling with these challenges due to the lack of foreign exchange reserves in Pakistan.

The struggle to open LCs has severely affected the smooth functioning of the supply chain, leading to disruption of production activities.

Indus Motors has a significant presence in Pakistan’s automobile industry and has invested $100 million in local production of Hybrid Electric Vehicles (HEV).

The company has been instrumental in establishing the local automotive ecosystem, with over 50 part manufacturers contributing to the value chain by producing parts worth over INR 250 million every working day.

In addition, the company has established 53 independently owned authorized dealerships that provide after sales service to customers, creating direct and indirect employment opportunities for over 450,000 people across Pakistan.

The temporary shutdown of the production plant poses challenges for the company, its employees and the overall automobile industry.

The management of Indus Motor Company Limited is likely to find a solution to overcome the shortage of raw material and resume operations as soon as the situation becomes favourable.

An analyst said the government and relevant stakeholders may also need to collaborate to find a long-term solution to ensure a steady supply of raw materials for the automotive and other affected industries.

Prompt action and strategic measures will be necessary to minimize the impact of these shutdowns on the economy and preserve the growth trajectory of Pakistan’s automotive sector.

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