Honda closes plant in Pakistan as economic crisis worsens

The assembler of Honda automobiles in Pakistan, Honda Atlas Cars, stated on Wednesday that the company will not be able to continue with its production and will shut its plant for the remainder of the month. The automaker sent a notice to the Pakistan Stock Exchange, stating that its supply chain has been “severely disrupted”. 

“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,” it stated. The company added that it is no longer in a position to continue its production and will shut the plant from March 9 to 31. 

Other four- and two-wheeler companies such as Toyota Motors, Pakistan Suzuki, Indus Motor Company also shut their plants previously, which impacted their sales. Fahad Rauf, head of research at Ismail Iqbal Securities, a local brokerage firm, said that these shutdowns do not just impact corporate profitability but unemployment too. “The longer these shutdowns continue, it would test the companies' ability to maintain staff strength," said Rauf. Other manufacturing halts in the sector have been between two and 16 days.