India and Pakistan once united before the partition share a lot in common. The two countries are known to share similarities in terms of food and cuisine, fashion trends, weddings and festivals, language, and so forth.
However, the economy and progress are starting to drive a significant wedge between the two. While GDP is not going to be discussed here, the divide is becoming clear even when we look at automobile sales. Although India’s car market is significantly larger than ours, it hasn’t always been like this since day one.
While the Indian automobile market expands, car sales in Pakistan continue to nosedive. Only 4,850 units were sold in October 2023, which will be remembered as the worst month for the local auto industry in terms of sales. This is a 24.34% month-on-month (MoM) decline from 6,410 units sold in September 2023, and 56.42% less on a year-on-year (YoY) basis as over 11,129 units were sold in October 2022. Not to mention numbers from October 2022 were already badly dented.
Contrary to this, new car sales in India jumped 16.3% YoY from 336,679 units in October 2022 to 391,472 units in October 2023. This was also the highest-ever monthly car volume recorded in India. If we compare, sales recorded in the month of October in Pakistan are hardly 1.2% of the total number of cars sold in India in a month. Furthermore, the cumulative sales of all automakers in Pakistan have never touched even 300,000 units a year, but way more than this is recorded in a single month across the border.
The burgeoning economy and substantial purchasing power of consumers, particularly the younger demographic, in India, coupled with the country’s size and the presence of a number of international automakers, have been the primary drivers of automobile sales. Furthermore, the luxury car segment in India is also undergoing a major transformation due to the rising wealth and spending power of young Indians. Automakers such as Audi, Mercedes-Benz, BMW, and Lamborghini have been enjoying record sales in India in recent times.
India has already surpassed Japan to become the third-largest market for car sales, automakers are now aiming for record-breaking sales in the country in 2023. Sales continue to rise even when the end of the year is approaching, thanks to festive seasons & mouth-watering discounts offered by automakers.
On the other hand in Pakistan, dwindling car sales due to rising car prices, coupled with the shrinking purchase power of the masses as well as unrealistic auto financing conditions have badly hurt domestic car sales. Even car financing is out of the question for many, for example, a basic Peugeot 2008 crossover with a 1.2L engine will need the customer to pay a downpayment of Rs 39.0 lac and then monthly pay out more than Rs 216,000 for 18 consecutive months. Not to mention, the above payments do not include the charges for freight, insurance, and tracker which may add up to another Rs 200,000 to the total.
The monthly installment of a 1.2L crossover is significantly more than the salaries of the majority of executives in Pakistan. Imagine what will happen when opting for more expensive sedans or SUVs. The government needs to come up with a concrete long-term plan, which requires a lot of things to be addressed other than just giving incentives & tax breaks to the auto assemblers to boost sales. Unless economic stability is returned and public spending power is restored, one cannot expect automobile sales to recover.
Related: How Viable is Car Financing Today?
Analysts already predicted that car sales will remain gloomy throughout the fiscal year 2024 with another 14% drop in sales anticipated. This means if sales have come down to less than 5,000 units a month (for PAMA member companies) in October, it may fall down to around 4,000 units by the end of this fiscal year which will be alarming.
IMC boss Ali Asghar Jamali warned last year that if the unstable situation persists, the situation might force some automakers to leave the market. Regretfully, since Jamali made these comments in November of last year, sales have drastically decreased even further. Numbers below 5,000 units per month are quite concerning for any market. All we can do is pray that things get better or a miracle to work in our favor.
A computer animation professional with over 23 years of industry experience having served in leading organizations, TV channels & production facilities in Pakistan. An avid car enthusiast and petrolhead with an affection to deliver quality content to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com