We have been reporting for sometime that the local auto industry is in deep trouble with no light at the end of the tunnel. The recent floods have only exacerbated the situation, making things bad from worse. What’s even more worrying is that no one seems to know the way out.
What Is Ailing The Pak Auto Industry?
You can read more about about afflicts our auto industry and why its where it is today by clicking on With Auto Sales Dropping, Pak Automobile Industry in the Midst of Crisis but every auto industry enthusiast or watcher must know:
- In 2MFY23, the total Y-O-Y (Year-on-Year) sales of automobiles (SUVs, passenger cars, and LCVs) dropped by a whopping 50%. This has happened in two months. The only saving grace was Hyundai Nishat’s sales figures. Had it not been for Tucson, Elantra and Sonata, it would have been curtains for the industry
- The Month-on-Month (M-O-M) sales figures are scary as well, especially of the most selling make in Pakistan – Suzuki.
- According to the State Bank of Pakistan (SBP), M-O-M auto financing falls by 2.6%, a decline of Rs.8 billion
You see these alarming numbers for two main reasons:
- Expensive cars and restrictive auto financing policies
- Restricted import of CKDs
With fewer kits to assemble, many assemblers resorted to non-production days as plants were shut down for a specified period. What it did was it drove down volumes. The demand may still be there but unless restrictions are lifted by SBP, this demand will not be met.
So, unless the auto manufacturing plants are operating at full capacity, it can’t be said with certainty that increasing prices, increasing cost of auto loan borrowing, inflation in general are the main culprits behind fall in auto sales.
Winter Is Coming
Generally speaking, the cost of doing business in Pakistan is becoming increasingly high and the auto industry is not immune to what is happening in the economy. With higher cost of production comes another wave(s) of price increase. So, cars will cost even more in the coming months. This is largely due to a weakening Rupee against the US Dollar.
Pakistan is experiencing unprecedented floods of historic proportions and this will affect the auto industry as well. The sales of specific types of vehicles will go down, especially Hilux and Fortuner, etc. which are equally popular in the rural areas.
As prices are slated to rise, stay tuned to our new car page for the latest car prices.
What do you make of the present state of Pakistan auto industry? Let us know if you have solutions to the problems that afflict the industry today.