Pakistan Auto Industry

The auto industry in Pakistan is currently experiencing one of its worst crises ever, with a significant decline in car sales. According to data from the Pakistan Automotive Manufacturers (PAMA), only 6,034 cars were sold in Pakistan last month. Although there was a slight improvement of 10% compared to May, car sales dropped by a staggering 82% compared to the same month last year. This downward trend is expected to continue throughout this year, following a 56% decrease in car sales to 126,879 units in the fiscal year 2022-23.

The main factor contributing to this decline in car sales is Pakistan’s struggling economy, which is putting immense pressure on the automotive industry. The availability of completely knocked-down kits (CKDs) has significantly decreased, while high prices of existing inventories have dampened consumer buying sentiment. As a result, car manufacturers such as Pak Suzuki only witnessed a meager 2% growth in June, selling 3,009 units. Indus Motor Company, responsible for assembling Toyota vehicles, experienced a 7% growth with 1,846 units sold. Hyundai Nishat Motors saw an 11% growth in June, with the Tuscon SUV being the most popular model.

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In contrast, neighboring India’s auto industry remains relatively stable, with 327,487 units of passenger vehicles sold in June, according to the Society of Indian Automobile Manufacturers (SIAM).

Pakistan’s economy has been in a downward spiral for several years, causing significant hardships for the population, particularly due to unchecked inflation. This economic instability has also affected remittances sent by expatriates, with the State Bank of Pakistan reporting a loss of over $4 billion in remittances through illegal channels in the current fiscal year. The country received a total of $27.024 billion in remittances during FY23, compared to a record $31.278 billion in FY22, marking a decline of 13.6% or $4.254 billion.

To address its economic challenges, Pakistan recently reached a staff-level agreement with the International Monetary Fund (IMF) on June 29. The agreement entails a $3 billion Standby Arrangement to inject much-needed financial support into the ailing economy. This agreement comes after months of negotiations that pushed the country to the brink of default.

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