Karachi, March 17, 2024 – Pakistan has witnessed an unprecedented surge in the import of motor cars, with figures soaring by a staggering 259 percent during the first eight months (July – February) of the fiscal year 2023-24.
This surge has brought the total import value to $166.51 million, a substantial leap from $46.39 million recorded during the corresponding period in the previous fiscal year.
The remarkable increase in motor car imports can be primarily attributed to the relaxation of foreign exchange payment regulations by the State Bank of Pakistan (SBP). Additionally, the elimination of regulatory duties has further incentivized the import of motor vehicles, turning Pakistan into an appealing destination for international car manufacturers.
Indus Motor Company Limited, in a recent report, shed light on the evolving landscape of the automotive industry in Pakistan. According to the report, the normalization of used car imports can be attributed to the favorable import and taxation regime. Conversely, locally manufactured vehicles face a continuous rise in duties and taxes, posing a significant challenge for the domestic car industry.
The report also highlighted a substantial increase in the import of used cars, with figures surging by a remarkable 680 percent, totaling around 16,500 units compared to approximately 2,100 units during the same period last year. Members of the Pakistan Automotive Manufacturers Association (PAMA) expressed concerns regarding the adverse impact on the locally manufactured car industry due to this trend.
However, while the import of Completely Knocked Down (CKD) motor cars, primarily used for local manufacturing and assembly, experienced a decline of 23 percent to $473 million during the first eight months of the current fiscal year, compared to $614.40 million in the previous fiscal year.
The domestic car industry has encountered significant challenges, resulting in the decline in CKD motor car imports. Supply chain disruptions have continued to plague the auto sector, as highlighted in the Indus Motor report. Automotive financing in the new CKD market volume witnessed a sharp decline of 54 percent during the six-month period, primarily attributed to high interest rates and restrictive conditions imposed through prudential regulations.
The repercussions of these challenges have been profound, with the auto-sector operating below 30 percent production capacity during the six-month period, the lowest in the last decade. Consequently, frequent plant shutdowns have been observed, further exacerbating the situation.
As Pakistan navigates through these dynamics in its automotive sector, stakeholders and industry players are closely monitoring developments. The surge in motor car imports, coupled with challenges faced by the domestic industry, underscores the need for strategic interventions and policy adjustments to ensure sustainable growth and competitiveness in Pakistan’s automotive landscape.
