Amid ongoing Pakistan’s financial crisis, Honda announced that it will close its manufacturing plant in the country citing economic crisis and disruption in supply chain as a significant reason. The company has also said that its plant will remain shut from March 9 to 31.
Honda Atlas Cars has sent a notice to Pakistan’s Stock Exchange which cited that manufacturer’s supply chain has been 'severely disrupted', reported Geo News.
As per Honda’s statement, "Considering the current economic situation of Pakistan whereby the government resorted to stringent measures including restricting the opening of LCs (letter of credits) for import of CKD (completely knocked-down) kits, raw materials and halting foreign payments, the company's supply chain has also been severely disrupted by such measures.”
Recently, other automobile manufacturers have also closed down their production units including Pak Suzuki Motor Company (PSMC) and Indus Motor Company.
According to Geo News, Pakistan’s import reliant auto industry has been trapped in an exchange-rate crisis. This comes after State Bank of Pakistan imposed limitations on the opening of Letters of Credit (LCs).
Automobile companies have increased prices of CKD models due to the decline in production activity which has also affected people’s purchasing power.
Pakistan’s central bank foreign exchange reserves are close to $3.8 billion which are hardly sufficient for a month’s imports.