Raw material crisis forces Pak Suzuki to halt motorcycle production yet again

• Pak Suzuki extends motorbike plant shutdown till Sept 12. 
• Regular operations to continue at vehicle manufacturing plant.
• Latest suspension raises concerns among employees, stakeholders, and general public.

KARACHI: Facing an acute crisis of raw material shortage, Pak Suzuki Motor Co (PSMC) has once again announced to halt its motorcycle production for the third time in this fiscal year, The News reported Saturday citing a bourse filing.

The automobile manufacturer issued a notice to the Pakistan Stock Exchange (PSX), saying that the production will be suspended for the next 12 days — starting from September 1 to 12, 2023. 

Previously, the PSMC had announced a shutdown from August 18 to 31, 2023, as reported by the company’s secretary. Before that, the company was closed from July 31 to August 15, 2023, due to inventory constraints.

Despite a halt in production, regular operations would continue at the vehicle manufacturing plant, the bourse filing said.

Pak Suzuki has been grappling with raw material shortages since July of the preceding year, primarily stemming from difficulties in importing these essential components. The country’s dwindling foreign exchange reserves have contributed to import disruptions.

Analyst Sunny Kumar of Topline Securities in a note said: “PSMC produced 19,293 units with capacity utilisation of 26% in 1H2023 compared to 76,325 units produced with capacity utilisation of 102% in 1H2022.”

The management of the company expects economic recovery in FY24 on the back of a rebound in agriculture output and easing of import restrictions, with expected improvement in manufacturing/construction activity, the analyst added.

PSMC’s situation mirrors that of other renowned automakers, such as Honda Atlas and Indus Motor Company, the local manufacturer of Toyota vehicles. All automakers have been experiencing repeated shutdowns due to the ongoing raw material shortage. This scarcity has also affected the automobile parts industry, causing intermittent production stoppages.

In a similar vein, Agriauto Industries Limited — a prominent automotive parts manufacturer — announced a partial plant closure in September due to decreased production. Furthermore, Agriauto Stamping Company Pvt Ltd, a wholly-owned subsidiary of the company, will also undergo a partial shutdown during the same period, as confirmed by the company secretary.

The announcement of Pak Suzuki’s latest production halt has raised concerns among employees, stakeholders, and the general public. The motorcycle plant, a significant division within the company, is a major contributor to employment in the country.

Pointing to a ripple effect, experts expect the closure to not only impact the company’s workforce but also the broader economy.

An industry observer emphasised that the suspension of motorcycle production underscores the enduring challenges faced by Pakistan’s automotive industry. The expert stressed the need for coordinated efforts between stakeholders and government bodies to address the root causes of raw material shortages and prevent further disruptions.