Indus Motor Company (IMC), the local assembler of Toyota vehicles, has declared a month-long production shutdown. The company has highlighted ongoing struggles with inventory shortages as the major reason behind this shortage. This marks the ninth shutdown announcement by the company in 2023 alone. The hiatus, slated from October 17 to November 17, is attributed to challenges in the supply chain. This has caused parts shortages and is consequently hindering the production of vehicles.

Production Shutdown

IMC’s decision reflects the persisting issues in maintaining a steady inventory of manufactured vehicles. The auto giant previously grappled with similar challenges, leading to a complete plant shutdown from September 28 to October 09. The latest notice to the Pakistan Stock Exchange (PSX) stated, “In case of any change in plan will be updated accordingly,” leaving room for potential adjustments.

Financial Impact

In its latest financial report, IMC disclosed a Profit After Tax (PAT) of Rs9.66 billion in FY23, showcasing a significant decline of almost 39% compared to the previous year’s earnings. The auto sector in Pakistan, heavily reliant on imports, faces a double whammy with government restrictions on imports and LC issuance. Moreover, soaring finance costs and a substantial spike in car prices have led to a drop in consumer demand.

Challenges in Automobile Industry

The first quarter of FY24 witnessed a 40% decline in sales, with 20,983 units sold, mirroring the tough times faced by the auto industry. Analysts attribute the challenges to high prices, expensive auto financing, and a tax surge, contributing to a year-on-year sales slump.

As the auto giant navigates through these challenges, the industry’s future remains uncertain. Consumers are caught in the crossfire of escalating prices, costly financing, and diminished purchasing power, painting a grim picture of the Pakistani automobile landscape.

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