Indus Motor Company shuts plant for three days on parts shortage

Published November 13, 2020
A leading Japanese automaker has announced to stop production for three days due to non-availability of parts.
A leading Japanese automaker has announced to stop production for three days due to non-availability of parts.

KARACHI: A leading Japanese automaker has announced to stop production for three days due to non-availability of parts, while assemblers and vendors are opting for costly air shipments of parts and accessories due to huge delays caused by congestion at ports all over Asia.

Indus Motor Company (IMC) Chief Executive Officer Ali Asghar Jamali told Dawn that “we have decided to close down production on Friday, Monday and Tuesday and will try to cover up production loss by calling workers on overtime in future".

He said arrival of imported parts is facing delays of two weeks due to ongoing port congestion all over Asia, forcing assemblers and vendors to go for air lift of inputs to avert any disruption in production lines of vehicles.

He said appreciating rupee value against the dollar may offset hike in air shipment charges. “We are rolling out 260 vehicles per day,” he added.

The country’s overall car production fell by 14.4 per cent to 39,175 units in 4MFY21 while October production also plunged to 11,601 units from 12,117 units in the preceding month.

Loads Ltd CEO Munir K. Bana said “we have airlifted components from Japan and Thailand for the manufacturing of exhaust systems for two leading Japanese car assemblers in the last one month.”

Munir added that emergency airlifting of components had to be arranged to meet the sudden increase in demand from the assemblers as the shipments were stuck in transit and deliveries were also delayed due to backlog in various Asian countries.

An executive in Honda Atlas Cars Ltd (HACL) said “we are facing CKD parts shortage due to sudden increase in demand plus our planned parts arrival is also an issue due to port congestion, resulting in production delays in addition to air shipments at higher costs.”

Production of Honda Civic and City dropped to 1,719 units in October from 2,261 units in September.

Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Chairman Abdul Rehman Aizaz said the State Bank’s decision to cut interest rates to 7pc from 13.25pc in March has revived auto industry, but these higher volumes have also brought new challenges.

Procurement of raw materials and sub-components from international suppliers have become a difficult task from the last week of September, he said, adding that the sea freight cost from China has also swelled to $1,800-$2000 per 20ft container from $600-$700 in the last two months.

Due to worldwide disruptions in supply chain, raw materials like aluminum, copper, steel and plastics have registered a jump of 40-50pc from July till to date, resulting in bludgeoning of input costs for auto parts manufacturers, he said.

He said the value of rupee has risen by over five per cent from Aug 27 till to date, while Chinese currency against the dollar has also gained ground by seven per cent in the four to five months. Now the 6.6 yuan is equal to one dollar which was 7.2.

Published in Dawn, November 13th, 2020

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