Mansoor Sadiq

Pakistan’s auto sector, has pinned hopes on the State Bank of Pakistan (SBP) for issuance of letters of credit (LCs). Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has already sent a request to Federal Finance Minister Ishaq Dar, seeking the removal of import restrictions placed on auto/auto parts and issuance of LCs for auto manufacturers in the country.

As per a report of Pakistan Automotive Manufacturers Association (PAMA), car sales fell 66% during the first nine months (July-March) of the current fiscal year (2022-23). The report said major car manufacturers in the country including Indus Motor, Atlas Honda, Suzuki Motors, and bus and tractor manufacturers shut down their production units owing to feasibility issues and import curbs.

PAPAM Chairman Munir Bana told WealthPK that auto parts manufacturers in Pakistan provide employment opportunities to more than three million Pakistani workers, technicians, engineers, and management professionals, who are now facing layoffs as the auto industry has reached the brink of complete closure if measures were not taken on urgent footings to improve the current state of affairs.

In a letter, the PAAPAM has asked the State Bank to allow all the banks to open LCs for imports by auto manufacturers as rising inflation and depreciation of currency has taken the auto sector towards complete closure, which will ultimately leave millions of workers jobless and cause repatriation of foreign investment by automotive assemblers.The PAAPAM letter further pointed out that the prevailing drastic situation in the auto industry has been continuing since May 2022, which resulted into shutdown of production of all types of vehicles by over 70%.

According to PAMA, the sales of light commercial vehicles (LCVs), jeeps and pickups declined by 47% to 109,466 during the first nine months of the current fiscal year from 205,452 units during the corresponding period of fiscal year 2021-22. The sales of trucks also declined by 46% to 279 units during March 2023 from 521 units during February, while it stood at 500 units during March 2022. Truck sales during 9MFY23 dropped by 37% to 2,825 units against 4,493 units during 9MFY22.

Bus sales also witnessed further downslide with sales of only 29 units during March 2023 compared to 136 during February and 65 during March 2022, showing a month-on-month (MoM) drop of 79% and 55% on year-on-year (YoY) basis. Despite low monthly sales, the overall 9MFY23 bus sales soared 22% to 557 units from 458 units during the corresponding period of last fiscal year.

Tractor sales also witnessed a fall by 49% to 21,233 units during the period under review compared to 41,603 units during the corresponding period of last fiscal year. With sales of 2,984 units during March, the MoM and YoY decline was 10% and 47%, respectively. The sales of two-wheelers were also recorded at 908,555 units, down by 33% from 1.348 million during 9MFY22. During March, bike sales stood at 83,149 units, showing a fall of 17% on MoM and 43% on YoY basis.

Credit: Independent News Pakistan-WealthPk