Surge in car imports dents local industry sales

Automakers decry over 700% rise in Feb vehicle imports

LAHORE:

Local automakers registered a slight improvement in their sales in February 2024 but it was more than offset by a massive 700% increase in imports of used cars in the same month.

“The growth in sales of the local auto industry, which has been under pressure since July 2022, after a hiatus of 19 months is being nullified by the hefty rise in imports of used cars,” remarked Aamir Allawala, Chief Executive Officer of Tecno Auto Glass Limited.

In February 2024, 3,213 vehicles were imported compared to imports of just 396 units in the same month of 2023, showing a staggering 711% increase.

“Improved agricultural income from a better cotton crop and vehicle buying ahead of elections were the key triggers behind the pickup in sales of local assemblers in January-February 2024, but this cannot be sustained amid a huge influx of used cars into the country,” said Allawala.

He added that a ray of hope for the auto industry in the third quarter of financial year 2023-24 could not last longer as imports of used cars were continuously going up, which was evident from numbers of the last nine months (July-March).

He emphasised that the anticipated boost in economic activity would lead to the much-awaited recovery in demand for the auto industry, but it would only be possible if the new government worked towards curtailing imports of used cars.

Local industry players say that owing to the increasing imports of used cars, their share has increased to 30% in the current financial year, up from 4% in the previous year.

Data showed that car sales in the first nine months (July-March) of the ongoing fiscal year were recorded at 59,699 units, down 41% year-on-year compared to 101,426 units sold in the same period of last year.

“I believe that imports of used cars create a balance in the auto market as well as keep car manufacturers on their toes, in terms of embracing new technologies and features in the newly introduced vehicle variants,” said Bilal Hanif, a small-scale importer of Japanese cars.

This gives consumers a wider choice in terms of selecting an imported or local variant, and a price bracket. “Now imported variants are an integral part of the Pakistani auto market, the original equipment manufacturers (OEMs) should now accept this fact and try to focus on adding more quality features to lure customers,” Hanif stressed.

Published in The Express Tribune, May 7^th, 2024.

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