As Pakistan continues to face a shortage of basic items due to the State Bank’s (SBP) restrictions on opening new letters of credit, the auto sector of Pakistan is hugely impacted due to the shortage of certain parts and the decline in demand. As per a report from a local media outlet, the auto sector in Pakistan has fired 250,000-300,000 direct and indirect employees at a time of soaring inflation.
Problems Faced By the Auto Sector in Pakistan
The auto sector in Pakistan is facing plant closures and long delivery times for vehicles due to which the prices of cars have reached sky-high. The continuous erosion of the rupee against the dollar has made the parts even costlier so much so that the auto industry has to increase the prices to offset overhead expenditures. The CEO of Indus Motor Company (IMC), Ali Asghar Jamali said;“It is hard to predict future sales scenario as things are not visible regarding the opening of fresh LCs for parts and accessories. We do not know what is going on.”
Pak Suzuki kept its plant closed for 40 days in the last six to seven months; while, IMC has kept its plant closed for a total of 53 days due to the ongoing economic conditions. A consumer auto finance banker said; “We have witnessed a decline of around 50pc in terms of consumer footfall in the bank for auto financing from July 2022 to February 2023.”
As per sources, customers are looking for used cars due to suspension in booking and thin availability of new vehicles. Due to the increase in the prices of petrol and car, most of the customers are opting for 1,000cc cars or below as they can be financed for five years. The Suzuki Alto 660cc is the most sought vehicle among buyers in used cars. Auto part maker, exporter, and Director Mehran Commercial, Mashood Ali Khan, said; “The year 2023 will be a most difficult year for the auto industry. The main reason is the trust deficit between all federal ministries and provinces and the business community.”
Also read: Toyota Indus Motors to Stop Production in Pakistan and Refund the Clients