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How has the Auto Industry performed in the past year in Pakistan?

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According to recent reports, the auto industry in Pakistan has faced challenges in the past year. In March 2023, sales of automobiles crashed to half of the previous year’s numbers, with overall sales clocking in at 96,950 units sold across the country. This amounts to a month-on-month reduction of 14% from the 113,062 units sold in February and a year-on-year 47% from the 184,428 units sold in March of the previous year. The auto industry remains the second-largest payer of indirect taxes after the petroleum industry in Pakistan. Despite this, the automotive industry in Pakistan is one of the smallest but fastest-growing industries in the country, growing by 171% between 2014 and 2018.

It accounts for 3% of Pakistan’s GDP and employs a workforce of over 3.5 million people as of 2018. The Pakistani auto industry has been in turmoil due to massive increases in input prices and tightened auto finance. Car production and sales decreased by 58.1% and 53.3%, while trucks and bus production and sales decreased by 56.1% and 47.2%. However, the tractor’s production and sale increased by 60.7% and 98.2%. Despite oddities, Pakistan has almost attained 95% localization for tractors and motorcycles, 50% for cars, and 20-25% for trucks and buses.

The current auto policy from 2021-26 has a lot to allure foreign investors. Pakistan has 8-10 cars per 1000 people, which is the lowest ratio among emerging economies. The Pakistani auto market is among the smallest but fastest-growing in Asia. In 2018, 269,792 cars were sold in the country. The Passenger Cars market in Pakistan is projected to grow by 0.13% (2024-2028) resulting in a market volume of US$3766.0m in 2028. Pakistan is the 23rd largest producer of automobiles. Its contribution to the national exchequer is nearly Rs. 50 billion (US$220 million).

The auto industry in Pakistan has faced challenges in the past year due to massive increases in input prices and tightened auto finance. However, the industry remains one of the smallest but fastest-growing industries in the country, with a lot of potential to allure foreign investors. Despite the challenges, the industry has almost attained 95% localization for tractors and motorcycles, 50% for cars, and 20-25% for trucks and buses. The Pakistani auto market is among the smallest but fastest-growing in Asia, and the Passenger Cars market in Pakistan is projected to grow in the coming years.

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