Import quota, LCs prior permission hamper Indus Motor’s Production

Indus Motor Company Limited has expressed concerns over the import quota and prior permission of Letters of Credit (LCs) which are hampering the production of cars. Indus Motor’s production of cars has declined due to restrictions.

The management of Indus Motor Company Limited (INDU) has expressed concerns over the restrictive production of vehicles under recent initiatives of the State Bank of Pakistan (SBP).

It has conducted a detailed presentation regarding FY22 accounts. The management showed its concern about declining auto sales amid lower demand and restrictive production under SBP’s recent initiatives.

The management disclosed that the company is currently working at 40-45% of the capacity amid ongoing issues on CKD imports as both import quota and prior permission of LCs are hampering production.

It was also discussed that the government has not increased the import quota as per the monthly plan while it is also not known whether the quota will be abolished by Oct 2022 or not as previously directed by SBP.

Passenger Cars Sales in FY 23

Having said that, the company management pointed out that even if import restrictions are withdrawn, demand remains a key concern for the auto industry as sales of Passenger Cars (PCs) may decline by 40% in FY23. Just to recall, the auto industry sold 243000 units of PCs during FY22.

Due to sharp devaluation and further imposition of duties, the import of used CBUs is almost negligible in the ongoing fiscal year.

Last year in FY22, the industry imported 17000 units of used CBUs in the passenger segment. With regards to pending orders, the company currently has advance booking for 4 months assuming plant operates at 40% capacity utilization