Toyota, Suzuki to Partially Shut Pakistan Output over Forex, Shortage Issues

Toyota and Suzuki have decided to partially shut production output in Pakistan owing to forex issues and a supply chain crisis.

Due to exchange rate instability, import limitations, and a lack of essential raw materials, two of the country’s main automakers, Toyota and Suzuki, both Japanese, have opted to partially close their respective operations in Pakistan. According to Reuters, manufacturing and assembly operations will partially shut down next month.

The Pakistani government has moved to reduce imports in recent weeks in response to rapidly dwindling foreign reserves, a dropping currency, and a widening current account deficit, which has caused the country’s currency to lose more than 20% of its value this year, according to the report. This action has reportedly had a cascading effect on sectors of the economy that depend on imports to complete finished items, since the central bank has allegedly delayed the clearing of letters of credit due to a lack of dollars at the banks, which has limited their ability to import raw materials.

The report also reveals that Toyota will have only ten working days in Pakistan in August and that too if the country’s central bank allows the company an open letter of credit based on the quota they promised. Toyota has also started offering refunds to customers who are facing delays and markups on their payments. The current crisis is expected to delay vehicle deliveries in the country by at least three months, claims the report. Prices of the vehicles too

Pak Suzuki, which assembles Suzuki vehicles locally in the country, echoed the sentiment, citing the central bank’s new mechanism for prior approval for imports.