Due to the country’s economic instability, Pakistan’s vehicle sector has returned to zero development after seeing phenomenal growth in the previous two years.
According to the most recent Pakistan Economic Survey, the automobile industry’s growth dropped dramatically between July and March of the current fiscal year (FY 2022-23) compared to the 53.77 percent increase experienced the year before (FY 2021-22).
The decrease in output has been blamed on a lack of parts and completely knocked-down (CKD) kits as a result of controlled imports.
The paper also emphasises that the largest obstacles to future growth are sustained depreciation, inadequate finance, and a string of price increases brought on by increased inflation.
The policy rate progressively increased to 21% from 10% last year, it is added. The Pakistani rupee suffered a considerable decline at the same time that inflation kept rising.
As a result, auto finance became more expensive, and inflation increased automobile prices, which decreased market demand because fewer people had extra money to spend. In addition, the industry struggled as a result of increases in sales tax, capital value tax, and withholding tax.
The industry’s growth has been stunted as a result of the decrease in output and sales, which have been seen everywhere. This fall is mostly attributable to import restrictions that caused sporadic production shutdown.
According to the research, the automobile industry makes up 15% of Pakistan’s Large-Scale Manufacturing (LSM) sector and contributes roughly 4% of the country’s GDP. Additionally, it is a significant employer and source of income.
The development of the auto industry has been severely constrained by the current market downturn.