Auto sales plummet amid economic turmoil

Car sales drop nearly 23% as high interest rates, inflation hit purchasing power of consumers

KARACHI:

Sales of passenger cars fell to 71,449 units, depicting a 22.8% decline during the first eleven months of the fiscal year 2024 (July to May) due to an unsustainable policy, high interest rates, and all-time high inflation, according to data shared by the Pakistan Automotive Manufacturers Association (PAMA).

The PAMA reported that sales of both trucks and buses plummeted to 1,950 units (a 36.6% decrease) and 415 units (a 32.2% decrease), respectively. Sales of Jeeps and pick-ups dropped to 19,095 units (a 32.5% decrease), while sales of both two and three-wheelers (motorbikes and rickshaws) decreased to 1,060,217 units (a 4% decrease). In contrast, sales of tractors registered growth, reaching 41,360 units with a 48% increase.

“The automobile industry is the backbone of our economy, often considered the mother of all industries. Unfortunately, it has not been given the respect and priority it deserves. The industry stands on four pillars. First, the tractors industry has seen remarkable improvement due to the government’s Special Investment Facilitation Council (SIFC) policy and initiatives, showing positive results,” said Auto Sector Analyst Mashood Khan.

He added, “Secondly, the truck and bus industry, however, has been drastically neglected in terms of government priority. Over the past 11 months, we have produced only 2,365 units, a figure that used to represent just three months of production during better times.”

Khan noted that the motorcycle industry performed relatively well, with Japanese brands maintaining leading market shares compared to Chinese brands.

“When it comes to the car industry, there has been a slight improvement, but the overall car volume is projected to reach only 100,000 units by the end of this year, which is not an impressive figure.”

“We hope that the new government, in its first budget announcement, focuses on industrialisation. If so, the industry can rebound, ultimately helping to alleviate the government’s debt burden. It is crucial for the government to trust and support local industrialists for sustainable growth of the industry and economy,” stressed the analyst.