Karachi: The year 2023 has been tough for Pakistan’s car industry. Sales of vehicles have gone down by 55 percent. This means a lot fewer cars, trucks, and other vehicles were sold compared to before.
One big reason for this drop is the country’s foreign exchange crisis. This crisis made it hard to bring in parts from other countries, which are needed to make cars. Last year, the government even stopped allowing these parts to be brought in for a while. This ban affected car production a lot. Factories that make parts for cars also saw a 70 percent drop in their work.
The government lost a lot of money too because when fewer cars are sold, they get less money from taxes on these sales.
Bringing in important car parts became difficult. Banks had trouble managing foreign money, so they couldn’t approve Letters of Credit (LCs), which are needed to buy things from other countries. Even when the ban was lifted, people didn’t rush to buy new cars. One reason is that bank interest rates were high, making loans expensive.
The Pakistani rupee lost value, but car prices didn’t go up much in the last part of 2023. This small increase in prices didn’t help boost sales.
Also, the car industry in Pakistan couldn’t meet its goals of making cheaper cars and exporting cars made in Pakistan. Most new cars introduced were expensive SUV models, not small, affordable ones.
People had limited choices. They could buy new, but mostly expensive SUVs and hatchbacks, or go for used, reconditioned cars. Even the prices of these used cars went up, but their sales went down because they became too costly.
The car industry is now looking forward to 2024. They are hoping that hybrid technology, which is a step towards electric vehicles, will become popular. They also think that after the general elections, a stable government will help improve the economy and increase car sales. By 2030, they aim to sell five lakh vehicles, but this will need steady policies and lower interest rates.