Pakistan local auto industry is threatened with dire consequences of not issuing letter of credits. The car companies have announced a series of production shutdowns so far and still doing same in the face of disrupting supply chain.
In a recent notification, Honda Atlas has prolonged its production shutdown to more 15 days, from April 16, 2023 to April 30, 2023.
The notification reads:
“Further to our letter dated March 31, 2023, and considering the current economic situation of Pakistan whereby the Government resorted to stringent measures including restricting opening of LCs for import of CKD kits, raw material and halting foreign payments, the company supply chain has also been severely disrupted by such measures.
As a result, the company is not in position to continue with its production and ultimately ahs continued to shut down its plant.”
Previously on March 31, 2023, the company issued a notification extending the shutdown. The letters stated that the company is not in a position to continue with its production and has continued to shut down its plant from April 01, 2023, to April 15, 2022.
Production Shutdown SAGA
It bears mentioning that this is not the first plant shut down by Honda or other local car assemblers. Earlier, Toyota Pakistan announced a halt in production and related assembly of its cars from September 1-14 in the face of a procedure regarding CKD import approval from the State Bank of Pakistan (SBP). As per the company’s notification, the new mechanism came with some barriers to importing CKD Kits, which are gearing inventory problems.
The worrisome aspect of this whole situation is that the SBP still hasn’t opened LCs for the import of CKD kits, resulting in the scarcity of production material, eventually leading to no production at all.
