Pakistan has encountered a substantial 37 percent decrease in domestic car sales during the initial nine months of the fiscal year 2023-24, according to official data disclosed on Wednesday.
The year-to-date analysis paints a sobering picture, with car sales plummeting to 54,089 units during the first nine months of FY24 (July-March), a sharp decline from the 85,776 units sold in the corresponding period of FY23.
However, amidst this downturn, there was a slight uptick in car sales for the month of March compared to the previous year. Data from the Pakistan Automotive Manufacturers Association (PAMA) indicated that March 2024 witnessed the sale of 7,672 units, marking a 6.5 percent increase from the 7,201 units sold in March 2023. Nonetheless, March 2024 sales saw a 3.5 percent decline compared to the 7,953 units sold in February 2024.
Experts in the automotive sector have expressed concerns regarding the industry’s performance, citing a lack of encouraging numbers across various segments, excluding tractors and motorcycles. They highlighted the industry’s ongoing struggles, attributing the decline in sales to high prices and unsustainable policies. As a result, consumers are gravitating towards lower-priced vehicles, with sedan buyers now opting for hatchbacks.
The suggestion to ban used car imports and eliminate unrealistic taxes has been put forward to address the challenges facing the industry. Additionally, experts emphasized the importance of involving the industry in policy-making to prevent further deterioration.
In March 2024, sales of cars with engine capacities of 1300 cc and above surged by 32 percent compared to the same month of the previous year, reaching 3,844 units. Conversely, sales of 1,000 cc cars saw a significant decline to 669 units, compared to 964 units in March 2023.
The decrease in sales extends to other vehicle categories as well, including jeeps, pick-ups, and buses, posing challenges for the local auto parts industry. Experts urge the government to review policies related to the import of electric vehicles and consider inviting manufacturers to establish plants in Pakistan, particularly for electric buses.
Despite the overall decline, Honda Atlas Cars (HCAR) reported a robust growth of 44 percent month-on-month and 162 percent year-on-year in March 2024, attributed to the low base effect from the company’s plant shutdown last year. Conversely, Pak Suzuki (PSMC) and Indus Motors (INDU) both experienced a 16 percent month-on-month decrease in car sales in March 2024.
Looking ahead, experts anticipate a potential improvement in car sales with the expected enhancement in economic activity following the IMF’s new program, along with a stable currency and reductions in interest rates. These factors are believed to contribute to a positive trajectory for the automotive industry in Pakistan.
