PAKISTAN’S automotive industry has posted a robust growth in the Covid period. The new data from PAMA, the automotive manufacturers’ association, for the first eight months of the present fiscal, ie from July to end February, shows that the sale of passenger cars, jeeps, vans, pickup trucks, etc recorded a 24.3pc year-on-year jump to more than 113,905 units. The number doesn’t show the sales of one of the more aggressive new players, Lucky Motors. The two- and three-wheeler segment also expanded by 17.3pc year-on-year to 1.27m units. The sales of tractors more than doubled. But the manufacturers of buses and trucks saw their sales plummet. The automotive industry’s growth reflects an overall uptick in domestic economic activities after Covid-19 lockdown restrictions were lifted. The hefty reduction in interest rates that pushed auto financing has also played a major role in the turnaround in car sales. Car leasing jumped by Rs51bn in the seven months from July to end January. The automotive industry had been facing strong headwinds on tough economic conditions spawned by IMF-mandated economic stabilisation policies even before the country was hit by the coronavirus. Industry was shrinking on plunging sales as the government took unsuccessful actions to document the economy. However, the new impetus to the sale of cars and other automobiles in recent months has engendered hopes of an early revival. Total industry sales, barring trucks, buses and two- and three-wheelers, are projected to spike to half a million units over the next five to six years if the current growth momentum continues.

With several Chinese carmakers presenting their brands and investing in local assembly in Pakistan to take advantage of the tax concessions given in the 2016-2021 auto sector policy, the automobile industry is undergoing significant change as customers get more choices and old players come up with new and better models. The interest shown by Chinese automobile companies in introducing their electric cars at discounted prices and the expectation that Japanese carmakers will bring in hybrid vehicles could usher in more changes in the auto landscape and intensify competition. With the existing auto policy having attracted new Korean and Chinese automobile brands, the next policy for 2021-26 must focus on incentives for auto exports and the introduction of smaller, affordable, entry-level cars for middle-class consumers, especially working women. Additionally, the government also needs to ensure that carmakers pay special attention to complying with automotive safety to protect passengers.

Published in Dawn, March 13th, 2021