Analysts in the auto sector have criticized the federal budget for 2024-2025, labeling it a misstep and stressing the urgent need for a sustainable 24-year policy framework across all industries, particularly in automotive. They argue that such a policy should involve input from the cabinet, political parties, and industrialists to ensure consistency and long-term planning.
The current volatility in local policies, which can change abruptly, poses significant challenges for businesses, making investments and strategic decisions risky. Over the past two and a half years, the auto industry has faced persistent challenges, and analysts anticipate these difficulties to continue into the next fiscal year.
The analysts have urged the government to implement stringent austerity measures and make sacrifices to uplift morale among local businesses, industrialists, and the salaried class. They highlight that new taxes on salaries and the industry, as outlined in the budget, could further dampen economic activity.
Dr. Aadil Nakhoda, an assistant professor at IBA and auto sector analyst, expressed concern that increased taxes could diminish purchasing power among potential car buyers. He suggested that transitioning to a price-based taxation system could stimulate competition, particularly in price-sensitive market segments.
Criticism also revolves around the withdrawal of incentives for electric vehicles (EVs) and hybrids, which are seen as crucial for advancing technology adoption. Analysts argue for easing import restrictions on parts and components to aid industry recovery and provide consumers with more options, aligning with a consumer-centric approach.
Mashood Khan, another auto sector analyst, remarked on the budget’s overall impact on the industry, describing it as neutral. While acknowledging some benefits, such as slight restrictions on Completely Built-Up (CBU) units, Khan stressed that these measures are insufficient for long-term industry revitalization.
He highlighted disparities within the automotive sector, noting positive performance in the bike and tractor industries but expressing disappointment over the lack of incentives for buses and trucks. Khan emphasized the pivotal role of the auto industry in addressing economic challenges and called for robust support and incentives to bolster local manufacturing.
In conclusion, analysts emphasize the critical need for comprehensive, long-term industrial policies that foster growth and stability across Pakistan’s industrial landscape. They assert that such measures are crucial for navigating economic uncertainties and ensuring sustained development in key sectors like automotive.
