CKD Imports Fell To The Lowest-Ever Level

CKD imports by local assemblers fell 58% to just $23 million in October from $54 million in September. This is not only the lowest monthly CKD import total the country has ever reported, but it is also lower than the norm from the Covid era.

Bear in mind, that the average monthly CKD imports during FY22 stood at the highest at around $142 million. So far during the first 4 months of this fiscal year, CKD imports shrank 41% to $208 million compared to $355 million during the same period a year ago.

The massive drop in auto parts imports is the result of the government’s policy to control the current account deficit (CAD), leasing curbs by the State Bank of Pakistan amid unprecedented interest rates that discouraged auto financing, and a consistent decline over the last 16 months while high car prices and inflation erode purchasing power.

If this trend in CKD imports continues, car sales may dip further in November and December. The latest PAMA data shows that October 2023 was the worst month for local assemblers with hardly around 5,000 units of passenger vehicles sold in the entire country. Meanwhile, analysts have already predicted up to a 14% drop in overall sales during FY23/24.

Commenting on the situation, the acting CEO of Baluchistan Wheels Ltd (BWL) Mohammad Irfan Ghani said the automobile manufacturers are facing production issues due to shortages of parts that are imported as CKD. He said:

“The survival of automobile assemblers in Pakistan hinges on localization. Failing to pursue this path exposes the industry to high risks. Localization of parts offers several advantages, including cost-effective production, job creation, healthy competition, enhanced quality, and preservation of valuable foreign exchange.”

He said assemblers must earnestly consider reducing imports of CKD parts that are readily available from local vendors and can be manufactured using domestic resources. Encouraging local production not only strengthens the domestic industry but also eases the challenges faced by the auto vending sector, which is currently under significant strain, Mr Ghani added.

Source: Dawn