Honda shuts plant in Pakistan as economic crisis worsens

Honda Atlas Cars Pakistan (HACP) on Wednesday announced that it will shut down its plant owing to major currency devaluation and higher taxes in the budget, according to various media reports. The company states that the plant will stay closed from 9 March to 31 March 2023.
The automaker said that it will not be able to continue the production and will keep the plant closed for the remaining month.In a notice sent to the Pakistan Stock Exchange, Honda Atlas Cars said that its supply chain is severely disrupted, owing to which the company made this decision, reported Geo News.
Furthermore, the company added, “"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.”
HACP said that, “the company is not in a position to continue with its production and ultimately has to shut down its plant from March 9 to March 31."
Prior to Honda, Indus Motor Company (IMC) and Pak Suzuki Motor Company (PSMC) announced complete shut down of their production plants.
Auto industry of Pakistan is majorly dependent on imports and it has now been caught amid the exchange-rate crisis after its currency devaluation and imposed restrictions over the commencement of Letter of Credit, according to a media report.

Meanwhile, auto makers in Pakistan have also increased the prices of CKD models. The foreign exchange reserves of the Central bank stands at USD 3.8 billion that are not enough for a month's imports.
The Pakistan government is working to seek the support of the International Monetary Fund in order to revive the Extended Fund Facility programe if approved by the board and will release USD 1 billion funding.