Toyota And Suzuki Facing Currency Challenges And Supply Shortages

Toyota and Suzuki, Pakistan’s two largest automakers will shut down portions of their plants next month owing to a lack of raw materials due to import restrictions and fluctuating exchange rates, executives at both businesses said on Wednesday.

Since the rupee has lost almost 20% of its value this year as a result of dwindling foreign reserves, a weakening currency, and a growing current account deficit, the government has tried to reduce imports.

Industries that rely on imports to complete finished items claim the central bank’s action has delayed the clearing of letters of credit, causing banks to run out of dollars and limiting their capacity to import raw materials.

Indus Motor Company Ltd Insights

According to Ali Asghar Jamali, chief executive of Indus Motor Company Ltd- which assembles Toyota automobiles in Pakistan, The central bank must let us create letters of credit based on the quota they promised if we are to have 10 working days in the following month.

Due to the lack of dollars in the nation, he said that the firm was issuing refunds to clients who had experienced delays and markups on their payments. Delivery delays of at least three months were also anticipated.

The central bank’s $9.3 billion in reserves may not be enough to pay imports for more than two months. The most recent fiscal year’s current account deficit hit 5% of GDP as a result of historically high imports.

Pak Suzuki Motors Insights

The attitude was shared by Pak Suzuki, which assembles Suzuki automobiles locally and cited the central bank’s new system for prior clearance for imports.

Shafiq A. Shaikh, the head of public relations at Pak Suzuki Motors, said that restrictions had a negative influence on the approval of import consignments from ports.

Thus according to him, there may be a plant closure in August as a result of a lack of supplies.

He further said that if the current trend continues, major issues will arise starting in August 2022.

The State Bank of Pakistan declined to provide any remarks when asked.

According to statistics from the Pakistan Automotive Manufactures Association, the sale of domestically produced cars in Pakistan increased by around 50% between July 2021 and May 2022 compared to the same time the previous year.