Indus Motor Company (IMC), the assembler of Toyota vehicles in Pakistan, on Friday announced that it has decided to temporarily shut down its production plant from August 1, 2022 to August 13, 2022.

The official announcement comes just days after Business Recorder reported that IMC is planning to temporarily shut its production of all variants.

In its notice sent to the Pakistan Stock Exchange (PSX), IMC said it faces insufficient inventory levels required to maintain further production.

“Due to unforeseen devaluation of the Pakistani Rupee, coupled with the government restrictions, including the Letter of Credit (LC) approval constraints rendering it impossible to import Completely Knocked Down (CKD) kits without prior permission, and the continuing economic instability, the company is facing hurdles in import of CKD kits and components which is adversely affecting the supply chain and production activities,” read the notice.

It added that the situation is forcing the company towards a temporary production shutdown and closure of its plant.

“In the light of above, the company has today decided to temporarily shut down its production plant from August 1, 2022 to August 13, 2022.”

On Thursday, the Economic Coordination Committee (ECC) of the Cabinet decided to lift the ban on the import of all the items except completely built units (CBUs) of auto, mobile, and home appliances.

Back in May, the government, in order to curtail the widening current account deficit (CAD), had imposed a ban on the import of about 33 classes/ categories of goods. As a result of the decision, overall imports of the banned items reduced by over 69% i.e., from $399.4 million to $123.9 million.

A review meeting was also held to review the ban after two months owing to serious concerns raised by major trading partners on imposition of the ban and considering the fact that the ban has impacted supply chains and domestic retail industry.

As imports have reduced substantially, the ECC decided to lift the ban on imported goods except for Auto CBU, Mobile CBU and Home Appliances CBU.

Further, all held-up consignments (except items which still remain in banned category), which arrived at the ports after July 1, 2022 may be cleared subject to payment of 25% surcharge.

Earlier this week, Business Recorder reported that Pakistan’s auto industry is struggling to meet its scheduled delivery periods as restrictions have hindered timely import of auto parts, prompting one assembler to offer refunds to its customers.

The industry, highly dependent on imports, has been caught in the midst of an exchange-rate crisis with players in the auto sector either passing on the impact of rupee depreciation to its customers or, in the case of Indus Motor Company (IMC), offering its customers refunds with an additional payment of interest on it.

“The entire industry has scaled back production – in some cases, more than 50% of capacity,” IMC CEO Ali Asghar Jamali had told Business Recorder on Monday.

“There is no clarity (on the exchange rate). We will give the option to the customer to take a refund with a full-interest amount.

“In case the customer doesn’t want to choose this option, they will have to wait at least three months from the delivery month given on the PBO (Provisional Booking Order Form) and pay the price-difference due to the exchange rate situation,” Jamali added.

The developments come as Pakistan's rupee remained on its downward slide, depreciating to record lows throughout the week to finish near the 240 level on Thursday.

The strain on the currency comes as foreign exchange reserves held by the State Bank of Pakistan (SBP) fell further to $8.58 billion, much lower than the level required for two months of import cover.

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