Car sales soar on policy rate reduction

Passenger car sales rose by 32.2% to 83,269 units during the first 10 months of the current fiscal year compared to the same period in the previous year because of a fall in interest rate announced by the State Bank of Pakistan (SBP) and improved buyer sentiment.

According to data released by the Pakistan Automotive Manufacturers Association (PAMA), sales of all vehicles, including two, three and four-wheelers, went up, while sales of farm tractors decreased. Sales of jeeps-cum-pickups surged by 69% to 28,063 units.

Simultaneously, sales of trucks and buses increased by 88.8% to 3,261 units and by 68.6% to 624 units, respectively. On top of that, sales of motorcycles and rickshaws also gained momentum and rose by 30.4% to 1,227,956 units.

However, sales of farm tractors declined by 35.8% to 24,832 units due to a host of reasons, including climate change, a substantial fall in crop yield, less profit margins on the agricultural produce, severe water shortage in Sindh and other elements which discouraged farmers from growing crops and purchasing new tractors.

Automobile consultant and expert Shafiq Ahmed Shaikh said, "The increasing trend in the car segment is only because of the reduction in interest rates by the State Bank, so in this connection, different banks are offering good, manageable and above all affordable schemes for buyers on short and long-term instalments.

"In the past, we witnessed that whenever interest rates came down, sales increased to a good level. When it came to single digit, the sales reached up to 60%, especially for the small car segment. So, increasing and decreasing interest rates have a great impact on sales of the car segment."

He mentioned that in the next couple of years, existing sales are expected to gradually decline with the introduction of electric cars. EVs offer more features, a wider range of choices, excellent affordability, good mileage and easy access to charging stations.

In the coming years, there will be a significant revolution in electric cars, charging stations and the overall infrastructure. When this revolution occurs, electric cars will likely be available through attractive installment plans offered by banks and financial institutions.

Auto sector analyst Mashood Khan mentioned several factors contributing to positive trends in the automotive industry, including stability in the rupee against the US dollar, a gradual decrease in interest rates set by the State Bank and an improved overall economy.

He predicts that this positive momentum will continue until June. Sales of cars, motorcycles, buses and trucks have seen a significant increase as a result. He stated that the farm tractor industry has not recovered since the agriculture sector's policies from the last budget.

He said there will be major challenges for the local industry because of some International Monetary Fund (IMF)'s conditions in the upcoming budget. The imminent budget for 2025-26 may play a vital role in boosting the local automotive industry.