Pakistan’s automotive sector witnessed a downturn in FY24, with total industry sales dropping to 151,983 units from 161,632 units in FY23, marking a 6% decline. This decline was mainly due to excessively high car prices and record financing rates, leading to the lowest annual volumes since FY21.
According to a note by AKD Research, the sector particularly saw a steep drop of 18% in passenger cars and 9% in Light Commercial Vehicles (LCVs), attributed to increased vehicle costs fueled by supply chain disruptions, currency devaluation, and higher taxes. Despite these challenges, prices began to stabilise in FY24, allowing some manufacturers to lower prices in response to a more stable currency and an oversupply issue.
Tractor sales, in contrast, bucked the trend with a robust 47% year-over-year increase, likely spurred by heightened agricultural activity.
Individual automakers faced varying fortunes. Indus Motor Company Limited (INDU) reported a 33% decline in sales, closing the year with 21,314 units sold. Honda Atlas Cars (Pakistan) Limited (HCAR) also saw a decrease, with sales dropping by 22% to 18,679 units. However, Sazgar Engineering Works Ltd (SAZW) managed a slight growth, with 4-wheeler sales up by 2.94% YoY, totalling 5,374 units.
Total industry sales reached 17,717 units in June 2024, marking a 24% increase compared to May 2024. Major improvements in volumes were witnessed by passenger cars marking an increase of 2.3x YoY and 19%MoM.Â
The brokerage firm said that the upswing was driven by consumers buying cars ahead of potential budget alterations to change in tax policy, to evade extra charges resulting from the FY25 tax policy in anticipation.
