Karachi, January 29, 2024 – Honda Atlas Cars (Pakistan) Limited has released its report projecting 2024 as another challenging year for the country’s automotive industry.
In the report submitted to the Pakistan Stock Exchange (PSX) on Monday, Honda expressed optimism for potential improvements while highlighting the persistent hurdles faced in 2023.
The automobile sector in 2023 faced a prolonged phase of challenges, primarily attributed to supply chain disruptions caused by import restrictions and exchange rate instability. The industry grappled with inflationary pressures and high-interest rates, leading to a significant decline in overall vehicle demand. Pricing conditions and evolving regulatory requirements also played a role in shaping the operational strategies of car manufacturers.
Lower production volumes had a cascading effect, creating substantial pressure on suppliers dealing with declining turnover and adverse cash flows. The auto industry found itself entangled in a web of interconnected issues throughout the year.
The latter half of 2023 brought some relief to the industry as import restrictions gradually eased, thanks to an improved economic outlook. Aggressive control measures by the government positively impacted the USD-PKR exchange rate, allowing original equipment manufacturers (OEMs) to adjust product prices, thereby enhancing customer satisfaction.
Despite witnessing a modest recovery in the four-wheeler segment during the latter part of the year, operational capacity remained underutilized. The overall industry production for the nine months ending December 2023 stagnated at 59,266 units compared to the 160,217 units produced a year ago. Similarly, car sales declined to 55,435 units against 157,931 units during the same period.
Honda Atlas Cars (Pakistan) Limited, specifically, produced 6,270 units in the mentioned period, down from 21,393 units a year ago. The company sold 5,486 units as compared to 20,551 units in the corresponding period of the last financial year.
The dynamics of the automobile industry have fundamentally shifted in recent years. Auto manufacturers are adopting a more cautious approach as the decline in demand and margins appears to be a persistent feature of the auto business. As the industry braces itself for another challenging year in 2024, there is hope for car manufacturers to navigate these challenges successfully and capitalize on emerging trends.
Replacement demand from corporate fleets is expected to remain relatively strong. Once the economic situation normalizes, stable pricing is anticipated to improve pent-up demand from individual customers. While uncertainties loom, the automotive industry is resilient and adaptable, with opportunities for recovery on the horizon. Honda Atlas Cars (Pakistan) Limited, along with other manufacturers, is poised to weather the challenges and emerge stronger in the evolving landscape of the Pakistani automotive market.