Tag: Inventory Shortages

  • Honda Atlas extends production suspension amid an ongoing parts shortage

    Honda Atlas extends production suspension amid an ongoing parts shortage

    Honda Atlas Cars (Pakistan) Limited, a subsidiary of Honda Motor Co., Ltd. of Japan, has officially announced a temporary plant shutdown due to supply chain disruptions.

    In line with their communication dated October 30, 2023, the company has made the decision to extend the plant closure from November 8, 2023, to November 9, 2023, as disclosed in their notice to the Pakistan Stock Exchange (PSX).

    The automaker further said that any updates to this plan will be duly communicated.

    The automaker had previously communicated the shutdown of its plant from October 24, 2023, to October 31, 2023, and later extended it to November 7, 2023.

    This decision was attributed to significant inventory levels and disruptions in the supply chain, which have severely affected the company’s production capabilities.

    Earlier this year, Honda Atlas Cars also suspended its production activities from March 9 to May 15, citing adverse economic conditions in the country and government-imposed restrictions on Letters of Credit (LC) issuance.

  • Here’s why Toyota Indus Motor Company is halting car production for one month

    Here’s why Toyota Indus Motor Company is halting car production for one month

    Indus Motor Company (IMC), the leading manufacturer of Toyota vehicles in Pakistan, has announced a temporary production suspension lasting a month due to inventory shortages.

    The company informed the Pakistan Stock Exchange (PSX) of this development.

    Starting on October 17 and concluding on November 17, 2023, Toyota IMC has chosen to halt production in response to insufficient inventory of vehicles and parts stemming from supply chain challenges.

    The company has stated that they will keep stakeholders informed of any adjustments to this plan. This marks the ninth production closure announcement by Indus Motor this year. In the previous month, the company ceased plant operations from September 28 to October 9 due to similar inventory issues.

    In its most recent financial report, Indus Motor recorded a profit-after-tax (PAT) of Rs9.66 billion for FY23, representing a nearly 39 per cent decline compared to the earnings of Rs15.8 billion in the preceding year’s corresponding period.

    The Pakistani auto sector, heavily reliant on imports, has encountered hardships due to government measures to restrict imports and limit LC issuance. Elevated financing costs and substantial car price hikes have also dampened consumer demand.

    In the first quarter of FY24, sales figures reached 20,983 units, reflecting a 40 per cent decrease compared to the same period in the prior year.

    The Pakistani automotive industry is grappling with dwindling demand, primarily attributed to soaring prices, costly auto financing, and increased taxes, all contributing to a year-on-year decline in sales.

  • Pak Suzuki’s fiscal year ends with Rs9.68 billion loss: Operational disruptions and low demand

    Pak Suzuki’s fiscal year ends with Rs9.68 billion loss: Operational disruptions and low demand

    Pak Suzuki Motor Company Limited (PSMCL) has reported a substantial net loss of Rs9.68 billion for the fiscal year that ended on June 30, 2023. The loss was attributed to import restrictions and weakened demand, causing a significant increase compared to last year’s Rs17.238 million loss.

    The drop in sales was due to operational disruptions caused by inventory shortages. The loss per share (LPS) reached Rs117.58 for this year, a stark contrast to the Rs0.21 LPS recorded from January to June 2022. Despite these challenges, the cost of sales remained stable at Rs39.037 billion, compared to Rs108.415 billion the previous year.

    Financial expenses surged to Rs10.141 billion from Rs1.842 billion last year, contributing to the increased losses. However, the company did manage to achieve a Rs3.238 billion profit for the quarter ending on June 30, a significant improvement from the Rs442.989 million recorded during the same quarter the previous year. Earnings per share for this quarter were Rs39.36, compared to Rs5.38 per share in the previous year.

    Experts noted that the second-quarter results exceeded expectations due to increased gross margins from car price hikes. The company also gained from finance income of Rs2.6 billion due to exchange rate gains.

    During this time, the company’s revenue dropped by 67 per cent year-on-year and 2 per cent quarter-on-quarter due to lower sales volume caused by disruptions in raw material supply and reduced demand. Despite challenges, the company achieved a 10 per cent gross profit margin in 2QCY23, a significant increase from 4 per cent the previous year.

    According to The News, the auto sector faces challenges like obtaining Letters of Credit (LCs) for imports and sluggish demand due to high prices and interest rates. Car sales declined 57 per cent year-on-year in the first month of fiscal year 2023–24, as reported by the Pakistan Automotive Manufacturers Association (PAMA). PAMA-registered car manufacturers sold only 5,092 units in July, a 16 per cent decrease from the previous month.

    Despite the challenges faced by Pakistan’s auto industry, including low sales and various disruptions, it’s worth noting that car prices in the country remain at their highest point.

  • Car sales in Pakistan witness 57% decline in July 2023 compared to last year

    Car sales in Pakistan witness 57% decline in July 2023 compared to last year

    In the midst of ongoing economic uncertainty, the automobile sector has encountered a substantial decline in car sales, marking another significant setback.

    The most recent data released by the Pakistan Automotive Manufacturers Association (PAMA) unveils a noteworthy trend, with exclusive member carmakers collectively retailing a mere 5,092 vehicles during July 2023. This figure represents a notable downturn both in comparison to the previous month, with a 16 per cent decrease in sales, and to the same period last year, with a staggering 57 per cent reduction.

    Among the industry leaders, the Toyota Indus Motor Company (IMC) experienced a sales figure of 1,368 cars, indicating a 26 per cent reduction in sales on a month-on-month basis. On the other hand, the Honda Atlas Cars Limited (HACL) reported a sale of 494 cars, reflecting an unexpected 61 per cent surge in monthly sales. Meanwhile, the Pak Suzuki Motor Company (PSMC) encountered a decline of 19 per cent in its monthly sales, with a total of 2,444 cars sold.

    Hyundai Nishat Motors Private Limited (HNMPL) also made its mark by selling 569 cars in the past month, showcasing a modest 2 per cent increase in sales compared to the previous month. The resounding success of the Tucson model has been a driving force behind the company’s performance.

    While a slight uptick in sales has been witnessed, the overarching trajectory of the local car industry remains somber. Production disruptions persist as car companies grapple with inventory shortages, further exacerbated by the escalating prices and taxes that have curbed consumer demand.

    Experts caution that the challenges facing the industry are far from over, with more potential production obstacles and price escalations looming on the horizon. The road ahead continues to be a demanding one, requiring the industry to navigate through these formidable headwinds.