After a series of COVID-19 lockdowns, Pakistani auto industry resumed its activities in July 2020. As soon as the local market went back on, there was a significant increase in the demand for cars. As a result, the auto import bill in the 2nd half of 2020 went up to $93 million from $32 million in the 2nd half of 2019. The comparison of the two numbers shows a hike of 194%.
The rise in the import bill is because of two things. One, the increase in market demand due to the series of lockdowns in the country. Two, the arrival of many new entrants in the local market.
Here are the different car imports and their share in the auto import bill for July 2020 to December 2020.
Import of CBU Units of Cars
The figures of Pakistan Bureau of Statistics (PBS) show that a significant number of Completely Built-Up (CBU) units of SUVs and pickups were imported in the country. Over 90% of those CBU imports were 660 – 1,000cc cars imported by the newcomers, great news for the local auto market.
Chairman of the All Pakistan Motor Dealers Association (APMDA), H.M. Shahzad, believes that these imports of brand-new CBU units played a significant role increasing the import bill. The government had allocated quotas to new automaking companies to enter the Pakistani market and bring the CBU units of their cars in the country.
Import of CKD and SKD Kits
Parallel to the import of CBU cars, the imports of Completely Knocked-Down (CKD) and Semi Knocked-Down (SKD) kits have also increased. That means both existing and new automakers are assembling more cars in Pakistan, which sounds like good news.
However, Mr Shahzad has a different point of view. He commented that more imports of CKD/SKD kits also means low localisation in the assembly of vehicles by the automaking companies. And, that’s true. Because the government had asked the automakers to localise the assembly of vehicles in Pakistan. So they can create as many work opportunities in the country as possible. But the PBS figures show that the companies are doing the opposite. They import the CKD/SKD kits and do the minimal part in the local assembly of cars.
Import of Used Cars
Unlike the other two categories, the imports of used vehicles have decreased. As per the PBS figures, only 10,000 – 12,000 used cars, SUVs, and pickups were imported in the country during the 2nd half of 2020. The number is far lower than the 18,500 used car imports in the Fiscal Year 2020, 55,000 in FY19, an 82,500 in FY18.
The APMDA chairman noted the government’s decision of imposing new rules and regulations to curb used car imports as the reason behind this gradual decrease. According to those new rules, used cars can only be imported either under personal baggage or gift scheme.
Local auto industry went through a rough patch in 2020 due to the COVID-19 pandemic. The overall imports in the Fiscal Year 2020 dropped by 55%. Things started to settle down as the FY21 started, and the auto market got back on its feet by December. The market saw year-on-year car sales grow by 20% in December 2020. Hopefully, this trajectory will continue in the new year, and the auto market will witness even better things in 2021.