Indus Motor halts productionfor 12 days on supply shortages

Shahid Shah
Thursday, Sep 28, 2023

KARACHI: Indus Motor Company (IMC) on Wednesday announced a 12-day shutdown of its production facility in response to significant supply chain disruptions and a decrease in demand for vehicles in the market.

This recent closure follows a similar shutdown in late August and early September, when the company grappled with challenges related to the import of raw materials.

IMC secretary in a statement issued to the Pakistan Stock Exchange notified: “Based on the current level of inventory of manufactured vehicles, the Company has decided to close its production plant from 28th September 2023 to 9th October 2023.” Indus Motors is not the only

automaker affected by the ongoing shortage of raw materials and a decline in demand because of an increase in prices.

Pak Suzuki Motors and Honda Cars have also faced multiple shutdowns recently due to similar issues. The root cause of these disruptions can be tracedto a shortage of foreign exchangereserves in Pakistan, which has ipacted various sectors reliant on imported rawmaterials.

The challenges in opening letters of credit (LC) have significantly hampered the smooth functioning of supply chains, resulting in delays in manufacturing processes across industries. IMC holds a significant position in Pakistan’s automotive sector and has made substantial investments, including $100 million in the local production of hybrid electric vehicles (HEVs).

The company has played a pivotal role in developing the local automotive ecosystem, involving over 50 part manufacturers who contribute daily by producing parts valued at over Rs250 million.

Additionally, Indus Motors has established 53 independently owned authorised dealerships, providing essential after-sales support to consumers. This initiative has created employment opportunities for approximately 450,000 individuals in Pakistan, both directly and indirectly.

The temporary closure of the production facility poses challenges not only for the company and its employees but also for the entire automotive industry. IMC’s management is likely to explore strategies to address the raw material shortage and restart operations as soon as conditions permit.

One industry analyst emphasised that finding long-term solutions to ensure a consistent supply of raw materials for the automotive industry and other affected sectors may require collaboration between the government and relevant stakeholders.

Swift action and strategic solutions will be essential to mitigate the economic impact of these closures and maintain the growth trajectory of Pakistan’s automotive sector.