Toyota vehicle assembly in Pakistan is being handled by Indus Motor Company, which has decided to halt manufacturing from August 25 to September 6.
The reason provided for the short-term suspension is a considerable decline in demand, which is attributed to lower consumer purchasing power.
Toyota Informed PSX About Plant’s Closure
On Thursday, the business informed the Pakistan Stock Exchange (PSX) of this occurrence in an official statement.
During fiscal year 2022-2023, the auto industry experienced continuing headwinds as a result of an unfavorable economic environment, including reduced consumer buying power and an increase in federal government taxes and tariffs.
Because of the combination of these difficulties, vehicle demand has been steadily declining.
Given the current state of poor demand and controllable inventories, the company chose to temporarily shut down its manufacturing facilities.
The downtime will extend from Friday, August 25 through Wednesday, September 6.
IMF Agreement and Financial Crisis
Despite the last-minute agreement with the International Monetary Fund (IMF), both industries and consumers in Pakistan are still stuck in financial woes.
Several other companies, including Sitara Peroxide and Pak Suzuki Motor Company, had already declared plans to cease operations, citing concerns ranging from changing demand to supply chain restrictions.
The country’s automobile sector is particularly noteworthy, as it is dealing with a lot of economic challenges.
Among these is the industry’s ongoing struggle to get the necessary Letters of Credit (LCs) for import operations.
Aside from the LC problems, the sector is grappling with falling customer demand, which can be attributed to increasing price structures and record-high loan rates.
The problem is exacerbated by the continued decline of the local currency, the rupee.
Decline in Car Sales in 1st Month of FY 23-24
Car sales in Pakistan decreased 57% year on year (YoY) in the first month of fiscal year 2023-24, according to the Pakistan Automotive Manufacturers Association (PAMA).
Cumulative sales from PAMA-registered car manufacturers totaled 5,092 units in July.
Furthermore, based on the data presented, a month-on-month (MoM) study shows a 16% decrease in sales.
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