KARACHI: The auto sector crisis deepened as Indus Motor Company (IMC) and Millat Tractor Ltd (MTL) on Tuesday announced production shutdowns due to parts shortages and delivery disruptions due to flood devastation across the country.

The assembler of Toyota vehicles informed the Pakistan Stock Exchange that its plant will remain shut from Sept 1-16 due to parts shortages caused by import restrictions.

IMC also kept production suspended from Aug 1-13 attributing it to the State Bank of Pakistan’s mechanism for the auto sector to obtain prior approval for importing completely knocked down (CKD) kits and components of passenger cars.

Usually, the contractual and daily wage workers are laid off from the assembly lines during non-production days (NPDs). When contacted, IMC Chief Executive Officer Ali Asghar Jamali told Dawn on Tuesday that “we have not offloaded any contractual and daily wage workers in the wake of NPDs and we have no plans to do so in the near future.”

He added that overall employees’ strength in IMC is over 4,000.

The company in a stock exchange filing said that the delay in approvals for the clearance of import consignments had created hurdles resulting in a significant reduction in parts availability and consequently creating an adverse impact on the supply chain and production activities.

IMC resumed the booking of vehicles recently after keeping it suspended from May 18 onwards.

Production of Toyota Yaris and Corolla in July plunged to 2,566 units from 4,181 units in July 2021 while that of jeeps and pickups stood at 1,016 units versus 1,082 in July 2021.

Mashood Ali Khan, an auto part maker/exporter, said only IMC supported the small and medium-sized auto parts vendors during Covid-19 and now again offering a breathing space by giving interest-free loans to these vendors for their survival during NPDs starting from July onwards. The loans can be returned from January-June next year from sales.

He said other auto assemblers should also come forward to support small and medium-sized part makers otherwise they would resort to laying off workers or closing down their plants due to increases in raw material prices and other overhead costs.

Mr Mashood also urged the assemblers to announce NPDs simultaneously rather than on different dates so that vendors could also manage their operations.

Millat Tractors Ltd (MTL) in a stock filing said it would also keep its production operations closed from Aug 31 to Sept 16.

The company said tractor deliveries have been affected due to damaged road infrastructure in view of devastating floods all over Pakistan followed by parts shortages.

Published in Dawn, August 31st, 2022

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