Indus Motor to go on 13-day production break

KARACHI: Facing serious hardships in importing raw materials, Pakistan’s leading car manufacturer, Indus Motor Company (IMC), has decided to temporarily shut down its auto production plant from August 1-13.

The company secretary announced via a notice to the Pakistan Stock Exchange on Friday that rupee devaluation and government restrictions were adversely affecting the supply chain and production activities. Restrictions, including letters of credit constraints, had made it impossible to import completely knocked down (CKD) kits without prior permission as well as components, which had resulted in delay and insufficient inventory levels as would be required to maintain further production.

“The situation is forcing the company towards a temporary production shutdown and closure of the company’s plant,” he said. “In the light of above, the company has today decided to temporarily shut down its production plant from August 1, 2022, to August 13, 2022.”

This information at the PSX invited buying in the shares of the IMC, whose share price rose by 4.5 percent or Rs43.18 to close at Rs994.60/share.

Rupee free-fall and higher prices of raw materials have already resulted in a price hike of the company’s locally manufactured variants of Corolla, Yaris, Fortuner and Revo effective from July 28.

Starting price of Corolla 1.6 went up Rs990,000 to stand at Rs4.899 million, while ex-factory price inclusive of CVT went up Rs1.130 million to stand at Rs5.639 million. Corolla 1.8 price jumped up Rs1.180 million to stand at Rs1.290 million, whereas 1.8 Altis Grande now stands at Rs6.189 million per unit.

The price of Yaris 1.3 and 1.5 increased from a minimum of Rs760,000 to Rs910,000. Thus, Yaris 1.3 starts at Rs3.799 million and 1.5 starts at Rs4.569 million.

Toyota Fortuner’s prices increased by Rs2.530 million to Rs3.160 million, with the new price now Rs12.489 million for Fortuner 2.7 G and Rs15.839 million for Fortuner Legender Diesel. Prices for different variants of Revo increased by Rs1.830 million to Rs2.270 million. Hilux E prices was jacked up by Rs1.680 million to now stand at Rs9.039 million per unit.

However, booking for all cars has been put on hold by the company.

IMC is a joint venture between certain companies of House of Habib of Pakistan, Toyota Motor Corporation (TMC) and Toyota Tsusho Corporation (TTC) of Japan. Incorporated in 1989, the company manufactures and markets Toyota brand vehicles in Pakistan. These include several variants of the flagship Corolla and Yaris in the passenger car segment, Hilux in the light commercial vehicle segment, and Fortuner in sports utility vehicle segment.

Over 31 years since its inception, IMC has sold more than 961,500 CBU/CKD vehicles. It has also demonstrated impressive growth in terms of volumetric increase. From a modest beginning of 20 vehicles per day production in 1993, the daily production capacity has now increased to 288 (with overtime) units per day.

The company has a workforce of around 3,000 employees and a strong network of 50 independent 3S Dealerships spread across the country. It has 52 local vendors that supply parts.

Auto analyst and former chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), Mashood Ali Khan said Indus shut down came because of the government policy related to the import of CKD. “When the supply chain is disturbed, production is disturbed. Last month, we also saw a shutdown of 10-12 days,” he said.

He suggested that all original equipment manufacturers (OEMs) should unite on one point agenda, as the CKD issue would not relate to one manufacturer only. “All OEMs should form a long-time strategy. They should decide whether they would shut down their plants for the first 10 days or the last 10 days of the month. If all of them do not close production at the same time, the part manufacturers will have to work while there will be a problem for the part manufacturers as well. They are also facing challenges, as prices are uncertain,” he said.

Khan said the government's performance was almost null in controlling the falling rupee. “All industrialists and economists should be taken on board, as the government alone cannot set the direction.” He said the economy was deteriorating day by day and the situation would continue until they generate some funds.