According to the Pakistan Bureau of Statistics (PBS) Pakistan’s Large Scale Manufacturing Industries (LSMI) production was decreased by 3.56 per cent MoM in September 2023 to stand at 112.85 as compared to 117.02 in August 2023. Conversely, on a yearly basis, the LSMI output witnessed an increase of 1.01 per cent YoY against 111.73 recorded in September 2022. Cumulatively in 3MFY24, LSMI has shown a growth of 0.68 per cent when compared with the corresponding period of previous year.
| Pakistan: Import Payments By Transport Group (Thousand US Dollar) | |||||||
|---|---|---|---|---|---|---|---|
| Details | Jul-Jun | Dec FY23 |
Nov (R) FY24 |
Dec (P) FY24 |
Jul-Dec | ||
| FY22 | FY23 | FY23 | FY24 P | ||||
| Transport Group | 3,628,596 | 1,266,210 | 99,811 | 109,313 | 144,303 | 747,440 | 772,025 |
| 1. Road Motor Vehicles | 3,009,873 | 1,073,575 | 68,159 | 106,397 | 117,357 | 661,743 | 672,233 |
| 1.1 Completely Built Unit (CBU) | 476,676 | 79,122 | 8,724 | 8,814 | 11,606 | 53,365 | 42,425 |
| a. Buses,Trucks & Oth. Heavy Vehicle | 190,795 | 61,504 | 8,510 | 6,004 | 7,239 | 37,065 | 29,005 |
| b. Motor Cars (CBU) | 282,639 | 15,623 | 4 | 2,798 | 4,049 | 14,534 | 12,837 |
| 1.2 Completely Knock Down (CKD) | 2,254,012 | 863,992 | 48,496 | 83,996 | 98,478 | 508,113 | 567,105 |
| a. Buses,Trucks & Oth. Heavy Vehicle | 429,429 | 249,047 | 20,403 | 9,287 | 15,325 | 135,917 | 99,695 |
| b. Motor Cars (CKD) | 1,747,959 | 577,396 | 23,539 | 69,679 | 79,384 | 346,653 | 440,219 |
According to the government officials in Pakistan, manufacturing with a share of 12.4 per cent in GDP has a dominant presence within the industrial sector. During FY2022, LSM with 9.2 per cent of GDP dominates the overall manufacturing sector, accounting for 74.3 per cent of the sectoral share followed by Small Scale Manufacturing, which accounts for 2.0 per cent of total GDP and 15.9 per cent sectoral share. The government officials recorded that except sluggishness in some areas in case of buses and two/three wheelers there has been robust growth in all-automobile sectors during July-March FY2022.
The higher growth effectively manifest clearing up the pent-up demand of Covid-19 period, otherwise negativity or stagnation in growth was persisting for the previous five years. During the year under consideration, there has been a persistent supply chain interruption because of chip shortages, skyrocketing freight costs, unrelenting rupee weakening, galloping inflation and auto financing restriction on high-end vehicles to reduce the import bill.
New Auto Industry Development and Export Policy 2021-26 has been proclaimed besides Make in Pakistan notion, in the new policy, interalia, Meri Gari Scheme, New Product Policy and setting up of export targets have been introduced. All these measures are encouraging, and it is expected that these initiatives would soon see the light of day. However, in the forthcoming outlook the demand would weaken, as disposable incomes would decline with higher inflation, and higher exchange rates and increasing interest rates, amongst other factors. As reported by the All Pakistan Automotive Manufacturers Association, the automotive industry in Pakistan faces a substantial setback as car sales plummeted by 56 per cent on a yearly basis in the first six months of the current fiscal year. Statistics reveal that a mere 30,662 car units were sold in Pakistan during the initial half of the current fiscal year, marking a stark fall compared to the 68,912 units sold in the same period of the previous financial year.
For the month of December alone, car sales registered a staggering 64 per cent fall from December 2022, with only 4,916 units sold. In contrast, December 2022 witnessed 13,780 units being sold. While there was a marginal 1 per cent monthly rise in car sales from November to December, the overall trend remains indicative of a challenging period for the auto industry. The November statistics registered 4,875 units, slightly edging up to 4,916 units in December.
Experts recorded that Pakistan has long had a problem in its auto industry. Not only do we not make our own cars, we do not even make any parts for the cars that are assembled. All of the parts are imported from abroad and assembled in our country. This behaviour was long encouraged through the Government of Pakistan, which gave the industry incentives and allowed major players to cement their place and not allowing new entrants into the market.