Local Assemblers Aim for a Rebound in 2024

Over the past few years, Pakistan’s auto sector has been declining, particularly after 2022, and has encountered several challenges that have caused it to revert to levels seen 20 years ago.

Depreciating currency value, skyrocketing car prices, insanely high interest rates & unrealistic financing conditions, coupled with import restrictions & supply chain disruptions that resulted in a series of non-production days & plant shutdowns, together with rising inflation and dwindling purchasing power of the masses, have all contributed to the decline of the auto sector.

Despite this, industry stalwarts and mentors are optimistic that the auto sector will bounce back in 2024. According to Ali Asghar Jamali, the CEO of IMC (Toyota), the auto market will surpass 350,000-unit yearly sales in the next two years and reach the 500,000-unit milestone by 2030. His company recently introduced the locally assembled Toyota Corolla Cross hybrid, claiming to have sourced over 50% of automotive parts locally.

Director of Sales and Marketing of Master Motors (Changan), Syed Shabbiruddin underscored their commitment to localization, acknowledging the challenge of localization requiring volume surety. The industry, once boasting around 300,000 units annually, is facing a stark contraction to approximately 100,000 units due to skyrocketed interest rates and inflation.

Secretary General of the Pakistan Automotive Manufacturers Association (PAMA), Abdul Waheed Khan highlighted the industry’s struggle amid economic and political uncertainties, import restrictions, and prioritization of food item imports over auto parts due to depleting foreign exchange reserves. Khan emphasized that the industry’s resurgence depends on both political stability and economic progress, particularly since buying a new car becomes a luxury during periods of extreme inflation.

Analyst and researcher Dr Aadil Nakhoda expressed optimism, foreseeing improved economic confidence post-elections leading to a recovery in both demand and supply. Nakhoda anticipates an upswing in economic activity in 2024 and a recovery in the automotive sector. Government negotiations with the International Monetary Fund (IMF), potential easing of imports, and new incentives for auto manufacturers under the new government could provide impetus for growth.

Industry leaders urge for a comprehensive 10-year policy, both locally and internationally, activating the Pakistan Standards and Quality Control Authority (PSQA), reducing taxes, and fostering small and medium-sized enterprises (SMEs). With technological advancements, comfort, safety, and quality at the forefront, the auto industry envisions a positive trajectory as it adapts to new and modern technologies, reducing dependence on traditional fuel sources. With probable interest rate drops, targeted economic recovery initiatives, and improved political stability anticipated for 2024, the auto sector is expected to experience growth once more.

Source: Tribune