Unrest has been triggered in the auto industry by restrictions on the opening of letters of credit for the import of parts amid exchange rate volatility. Auto assembler has hinted at a production slowdown while also refunding bookings to customers irate over late delivery concerns. Due to the uncertain economic conditions, some assemblers have also chosen to take non-production days (NPDs) this month and in August.
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Due to delays 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.
According to a representative of the Indus Motor Company (IMC), due to the delayed arrival of parts and the extended Eid holidays, manufacturing was on hold from July 1 to July 17.
As the quota being discussed with the State Bank of Pakistan for the imports of completely knocked-down (CKD) kits, the company is planning NPDs from August 1 through 14, he continued
According to him, the business is considering returning the money to clients who ordered automobiles since it was unable to deliver them on time, or it may ask them to wait three more months and pay the price difference as a result of the rupee’s fluctuation against the dollar.
Due to a fluctuating exchange rate and the non-opening of LCs, IMC has already delayed the booking of automobiles beginning on May 18.
Last week, the Public Accounts Committee (PAC) was informed that Rs189 billion had been deposited in advance by customers with 10 auto assemblers, with IMC taking the top spot with Rs99.2 billion, followed by Rs35.4 billion by Pak Suzuki Motor Company Ltd (PSMCL), Rs21.8 billion by Honda Atlas Cars (HACL), Rs11 billion by Master Changan Motors, Rs10.6 billion by Kia Lucky Motor Corporation Ltd, Rs6.9 billion by Hyundai Nishat Motors.
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.
Instead, they had been ruthlessly passing along the effects of the strengthening dollar relative to the rupee. If a buyer purchases one of the vehicles whose bookings are still open, the delivery time has typically ranged from two to ten months.
In addition to closing the plant on Saturdays, a Kia Lucky Motor Corporation Ltd (LMCL) official who asked not to be identified stated the business had chosen for three to four NPDs in the current month. In the event that the LC limits were not abolished, he stated that the company would continue to run on a single shift.
A Honda Atlas Cars Ltd. executive claimed that because to the Eid vacations, the company only performed NPDs on one or two days this month. There are no upcoming NPDs or potential booking closures being planned by the company. The smooth flow of CKD kits, he continued, is still a problem based on the SBP’s limit.
There are also some concerns with the quality. For instance, a public notification about the service campaign for the fuel filler neck for the Alto, which was produced between 2019 and 2021, is displayed on PSMCL’s website. The business worries that the neck gasoline filler could eventually explode or, in the worst case scenario, become perforated.
