Stakeholders in the automotive sector won’t want to look back on 2023. It was a year full of challenges with government restrictions imposed on the imports of CKD parts to curtail the outflow of foreign reserves, and assemblers facing difficulties in obtaining LCs, resulting in supply chain disruptions & plant shutdowns.
Further problems included depreciating currency value against the US Dollar which saw assemblers hiking the car prices up to 6 times within the first 5 months of this calendar year. Then the shrinking auto financing, rising inflation, and depleted purchasing power of the masses saw the auto sales in Pakistan reducing by 52% compared to already dented figures from the previous year. In fact, the industry now stands at 20-year-old levels as far as the production & sales figures are concerned.
Related: Sazgar’s Story Tells Exactly Why Every Automaker Wants to Launch SUVs
Despite this, many would not believe that assemblers are on cloud nine in terms of profitability, thanks to the expensive automobiles targeted at the elite class—those least affected by economic challenges who are willing to spend money on pricey vehicles with imposing road presence. During these testing times, the auto market witnessed local assemblers launch roughly 8 new cars in 2023, with not a single one deemed a mass-market offering.
Among notable new cars launched in Pakistan during 2023, the locally assembled Haval Jolion at PKR 80.28 lac, MG ZS EV, and MG4 priced up to PKR 149.99 lac and PKR 129.90 lac respectively, Hyundai Santa Fe at up to PKR 146.99 lac, GiGi EV at PKR 46.5 lac, Seres3 EV at PKR 91.9 lac (price later reduced to PKR 83.9 lac), and Toyota Corolla Cross at up to PKR 98.49 lac. Though the Gigi EV is supposedly a car for the masses, its outrageous price (almost twice as expensive as the 660cc Suzuki Alto) makes it a rather undesirable option.
Related: Hyundai Santa Fe Off to a Flying Start in Pakistan
Sazgar’s state of bliss with Haval SUVs is no secret, and the Hyundai Santa Fe’s flying start despite a price tag that exceeds PKR 14 million demonstrates how beneficial it is for automakers to launch highly expensive automobiles in Pakistan. The newly introduced Corolla Cross is expected to receive the same positive response.
However, views on the future of the local auto sector are divided. Ali Asghar Jamali, the CEO of IMC (Indus Motor Company) is optimistic that the industry will bounce back due to improved economic indicators. On the other hand, analysts believe that there will be up to another 14% drop in sales by the end of the current fiscal year in June 2024. Moreover, it is anticipated that the impending devaluation of the currency will lead to an additional increase in car prices, so negatively impacting the sales of locally assembled cars in Pakistan.
Related: How Can Car Sales Improve in Pakistan?
Even though sales of mass-market automobiles aren’t improving, it will be interesting to observe if local assemblers continue to believe in introducing high-priced vehicles in Pakistan. For what length of time will they be able to ignore volumes in favor of targeting deep pockets? We will have to wait to find out.
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
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