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Pakistan’s Biggest Truck Maker HinoPak Shuts Down Operations

Hinopak

HinoPak Shuts Down, Pakistan’s largest truck and bus manufacturer, has announced a temporary shutdown of its operations due to restrictions on imports by the government and challenges in continuing production. The company stated that commercial banks in Pakistan have been advised by the State Bank of Pakistan (SBP) to prioritize imports to essential sectors only, which does not include the auto sector. This has resulted in HINO facing difficulties in opening Letters of Credit (LCs) for importing CKDs and other raw materials. Consequently, the company has decided to temporarily shut down its chassis assembly plant from March 24, 2023, to April 04, 2023.

The Pakistani auto industry, which is heavily dependent on imports, is currently facing challenges due to the State Bank of Pakistan’s restrictions and unabated rupee depreciation, resulting in low reserves.

Hinopak

HinoPak Shuts Down

The auto finance sector in Pakistan is experiencing a continuous decline for the eighth consecutive month, following a drop in car production and sales. According to data released by the State Bank of Pakistan (SBP), car financing in February 2023 decreased by 9%, with Rs. 326 billion against the previous year’s Rs. 357 billion. Industry analysts predict that the sector will continue to face such challenges in the future due to increased monthly payments, higher interest rates, rising car prices, and production shutdowns causing delivery delays. Local car assemblers are announcing non-production days due to a shortage of inventory resulting from import curbs imposed by the State Bank of Pakistan on CKD kits to reduce car demand. Additionally, the SBP introduced strict conditions in September 2021, including an increase in the minimum required down payment from 15% to 30%, a reduction in the maximum tenure of auto financing from 7 years to 5 years, a decrease in the maximum debt-burden ratio allowed to a borrower from 50% to 40%, and a limit of Rs 30 lac on auto financing availed by one person from all banks in the aggregate. Financing for imported vehicles is entirely prohibited, regardless of engine capacity.

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