Import curbs inflicted on CKD kits by the former PDM government to cease the current account deficit are still hurting the country’s local auto industry. Back-to-back production cuts, dwindling sale charts and an uneven surge in car prices ceasing the purchasing power of the consumers is translating the whole episode.

As per the reports, Import of CKD kits took a considerable nose dive of 58% clocking at $23 million last month compared to $54 million recorded in September, even lower than what observed in Covid times.

While anticipating the coming months, the reports have revealed the further decline in car production which in turn shatter the already-declining sale graphs. According to the latest report from the Pakistan Automotive Manufacturers Association (PAMA), October 2023 witnessed a 26% month-on-month drop in car sales, with 6200 vehicles sold compared to 8312 units in September 2023.

In a year-to-year (YoY) comparison, there was a noteworthy decline of 54%. Factors contributing to this decline include escalating car prices, expensive auto financing, and a notable erosion of purchasing power.

The import of bus and truck Completely Knocked Down (CKD) kits experienced a significant decrease, plummeting by 92% to $1.5 million in October, down from $18 million in September.

Likewise, there was a 57% decline in the arrival of kits for heavy vehicles, amounting to $56 million during the first four months of FY24 compared to $131 million in the corresponding period last year.

Localization – The Only Savior

The viability of automobile assemblers in Pakistan is closely tied to the strategy of localization. Neglecting to follow this path exposes the industry to substantial risks.

The localization of parts presents numerous benefits, such as cost-effective production, job opportunities, healthy competition, improved quality, and the conservation of valuable foreign exchange.

Assemblers should seriously contemplate reducing imports of Completely Knocked Down (CKD) parts that are readily available from local vendors and can be manufactured using domestic resources.

Encouraging local production not only fortifies the domestic industry but also alleviates the challenges faced by the auto vending sector, which is currently experiencing significant strain.

Hope the automakers in the country will device a comprehensive plan to excel the localization despite crying over the spilt milk.