KARACHI: Over 6,000 used cars have been imported during the last financial year, giving a significant blow to the already beleaguered local auto industry.
According to the statistics, over 6,000 used cars were imported in the financial year 2022-23, with 1,800 units making their way into the country from May to June this year alone.
Industry experts have expressed deep concern over the impact of this surge in used cars’ import on the local auto sector.
Import of used cars crippling local auto industry: IMC chief
Zafar Ali, a former general manager at Hino and an automotive professional lamented the situation, saying, “This is very unfortunate that total used cars import now exceed the production of some original equipment manufacturers (OEMs), which is beyond comprehension, especially in the context of import control measures.”
The continued devaluation of the Pakistani rupee had a cascading effect on product pricing and the overall profitability of car manufacturers, leading to further price hikes in locally manufactured cars.
The challenges faced by Pakistan’s automobile sector have been mounting, with weak demand, rapid price escalation, expensive auto financing, and deteriorating economic conditions contributing to its woes.
Additionally, the OEMs continue to grapple with Letter of Credit (LC) restrictions, further straining their operations.
In the fourth quarter of the Financial Year 2023, major players in the auto sector, including Honda Atlas Cars Ltd, Indus Motor Company, and Pak Suzuki Motor Company Ltd, saw a staggering 57% decline in sales compared to the previous year.
This decline extended to a 38% drop in sales on a quarter-on-quarter basis, painting a grim picture of the industry’s health.
Honda Cars witnessed a 57% year-on-year decline in sales, while Indus Motors and Pak Suzuki faced a 58% and 57% drop, respectively. These figures underscore the severity of the challenges faced by key OEMs in the market.
Honda’s market share currently stands at approximately 10%, with Indus Motor holding around 19% of the market. Suzuki Motors dominates with a market share of about 42%, while Kia and Hyundai have collectively gained a 6% market share.
Zafar Ali said, “Car prices are primarily influenced by two factors: the depreciation of the rupee and fluctuations in international steel prices.”
He also highlighted that the influx of used cars import is undermining the progress made in terms of localizing auto parts, which had reached up to 71%.
As the Pakistani auto industry grapples with these challenges, the surge in used cars import adds another layer of complexity to the sector’s woes.
Copyright Business Recorder, 2023
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