Due to inflation and dismal economic conditions in the country, the sales of cars, SUVs, pickups, and jeeps in the 7 months of Fiscal Year 2023 have dropped by 40 percent to 94,296 units. According to stakeholders, the situation regarding car sales is expected to worsen in the coming months.
The Pakistan auto industry is still facing a shortage of auto parts due to the State bank of Pakistan’s restriction on opening new LCs. This has led several companies to shut down production for several days and consequently caused a delay in the delivery of vehicles. Despite this shortage, almost all car and bike companies hiked their prices. The plant shutdowns and decrease in bike and car sales did not discourage these companies from increasing car prices several times within a few weeks.
One of the main reasons for these price hikes has been cited to be the devaluation of the Pakistani rupee. This devaluation has caused auto parts to be very expensive to import, and consequently, car prices were increased. But, when the Pakistani rupee recovered against the dollar, no company came forward to give any relief to the customers. No price cuts or discounts were announced.
Car Sales In Coming Months
Due to the inflation and dropping car sales, the companies kept announcing non-production days, which resulted in the loss of 250,000-300,000 direct and indirect jobs. In this era of extreme inflation, when it’s hard to make ends meet, several thousand people have lost jobs due to the downfall of the Pakistan auto industry. For perspective, Pak Suzuki has observed 40 non-production days in the past 6 to 7 months, while Indus Motors Company has kept shut for 53 days since August last year.
One IMC spokesperson stated in an interview with Dawn news that the company has not laid off a single worker. Despite the harsh situation and 50% drop in production, no employee was fired, including drivers and low-salary workers.
Mashood Ali Khan, Director of Mehran Commercial, auto part maker, and exporter, expects a 40% drop in car sales in the current fiscal year. “The year 2023 will be a most difficult year for the auto industry. The main reason is the trust deficit between all federal ministries and provinces and the business community.”
What do you think will be the future of Pakistan’s auto industry? Share with us in the comments below!
Current scenario has figured out that despite local industry, they heavily rely on imports thus ended up in such imbroglio. There is a dire need to calculate once for all wrt parts being manufactured locally incl local labour and bing imported so as to correctly calculate car value. As of now it seems that companies are not under control of Govt and anybody else and increasing prices insanely. I recently cancelled booking of Oriel for this reason. Civic @ 1 CRORE is NOT ACCEPTABLE at all. For the time being one should STOP car bookings and let industry face music.