No LCs – Honda Atlas Extended Plant Shutdown

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Amid not Letters of Credit (LCs) and an unstable economy, Honda Atlas has decided to extend its production plant shutdown for 15 more days. In a letter to Pakistan Stock Exchange (PSX), the car assembler cited supply chain disruption due to the deterioration of the economy, along with restrictions on raw materials and CKD imports, as the main reasons for the shutdown. The letter also mentioned halting foreign payments as a reason for this step.

“As a result, the company is not in a position to continue with its production and ultimately has continued to shut down its plant from April 01, 2023, to April 15, 2022,” the letter added.

Honda plant shutdown

Last Honda Plant Shutdown 

Earlier this month, the company announced that considering the current economic situation of Pakistan, whereby the government restored stringent measures, including restricting the opening of LCs for the import of CKD kits, raw material and halting foreign payments, such measures have severely disrupted the company’s supply chain.

As a result, the company was not in a position to continue with its production. Ultimately, it had to shut down its plant from March 9, 2023, to March 31, 2023.

A Wave of Plant Shut Downs

Pertinently, this is not the first plant shut down by Honda or other local car assemblers. Pak Suzuki kept its production at a halt during the month of January 2023. In October 2022, Honda announced a week-long shut down of its plant, citing disruption in the supply chain. “Considering the current economic situation of the country, the government has resorted to stringent measures, including minimising the import of CKD kits and raw materials; the company’s supply chain has also been disrupted by such measures,” the notification by the company read.

Similarly, a month prior, 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. Hence, the coming days also seem to be as bleak as the past few months, as the country is still phasing through a serious economic crisis. 

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