In the first quarter of 2023, Japanese carmaker Pak Suzuki Motor Company (PSMC) recorded its highest-ever quarterly loss of Rs12.9 billion ($45.9 million), which observers blamed on the economic crisis that has posed difficulties for Pakistan’s auto industry.
In order to stop the flow of US dollars, Pakistan last year imposed import restrictions due to a severe balance of payments issue. Commercial banks stopped providing letters of credit (LCs) as a result, leaving importers—including automakers—struggling to secure the USD for already made orders.
As Pakistan strives to increase its foreign exchange reserves, which have dangerously fallen below $4 billion, import restrictions may continue for a longer period of time.
Some of the largest automakers operating in Pakistan, including Toyota, Honda and Suzuki, have started observing non-production days due to a shortage of spare parts and declining sales.
The country’s current economic climate has had a significant influence on PSMC’s business, which saw revenue for the quarter of January to March 2023 of Rs21.84 billion ($74.8 million). As compared to Rs47.74 billion ($167.5 million) that was reported previous year. The revenue represents a steep fall of 54%, according to information from a stock filing released on Tuesday.
According to the financial statement submitted to the Pakistan Stock Exchange, the company’s revenue decreased by 74 percent annually and by 64 percent on a quarterly basis as a result of a 70 percent decline in sales.
Suzuki stated in an earlier stock filing in March 2023 that its outstanding foreign liabilities had grown to $218 million by the end of December 2022 . Due to foreign currency transactions and exchange rate discrepancies, the business claimed to have experienced an exchange loss of Rs9 billion ($31.7 million).
