Pakistan: Automobile production and sales fell sharply in August as uncertainty over taxes on hybrid and electric vehicles weakened demand and left manufacturers awaiting a new policy framework, industry data showed.
Passenger car production declined 23% month-on-month in August, while sales fell 20%, according to data from the Pakistan Automotive Manufacturers Association (PAMA) cited by The News.
The decline was sharper in commercial vehicles, jeeps and pickups, where production dropped 40% and sales fell 29%. Farm tractor production decreased 23%, while sales declined 15% compared with July.
Total passenger car production fell to 13,267 units in August from 17,307 units in July. Sales declined to 13,717 units from 17,216 units during the same period.
Can Policy Uncertainty Push Pakistan’s Auto Industry Into a Downturn?
PAMA Director General Razi-ur-Rahman attributed the slowdown to prolonged regulatory uncertainty following the expiry of the Automotive Industry Development and Export Plan (AIDEP) 2021-26 in June.
The industry has yet to receive a successor policy framework, while uncertainty over sales tax treatment for hybrid, plug-in hybrid and range-extended electric vehicles has disrupted purchasing decisions.
PAMA said buyers were delaying purchases amid concerns that vehicle prices could change once the government announces the new policy. The association warned that continued uncertainty could increase unsold inventories and weaken manufacturing activity.
The association urged the government to announce the next automotive policy without further delay, arguing that a clear framework is needed to protect manufacturing investment and restore consumer confidence.
The jeep and pickup segment also recorded a significant decline, with production falling to 2,636 units from 4,361 units and sales dropping to 1,841 units from 2,602 units in July.
Will Strong Year-on-Year Growth Offset the August Slump?
Despite the monthly decline, the automotive sector recorded strong year-on-year growth during July and August.
Passenger car production increased 36% compared with the same period last year, while sales surged 80%. Commercial vehicles, trucks and buses recorded production growth of 84% and sales growth of 73%.
Two- and three-wheeler production and sales both increased 29% year-on-year, while tractor sales rose 5%. Tractor production, however, declined 17% as the sector adjusted to the end of a government subsidy programme.
PAMA said the annual improvement was supported by easing inflation, better credit availability and a low comparison base from previous years. Industry volumes, however, remain below the levels recorded during fiscal year 2022.
Among major manufacturers, Pak Suzuki remained the leading seller, with the Alto continuing as the top-selling car. Suzuki motorcycles also recorded growth.
Indus Motor Company’s sales eased in August after an unusually strong July, while the Fortuner and IMV range continued to perform steadily.
Honda Atlas Cars maintained its position in the sedan market, although demand for the HR-V was affected by uncertainty surrounding hybrid vehicle taxation.
Hyundai Nishat Motors also faces uncertainty over its hybrid and plug-in hybrid models. The relaunch of the Elantra, however, generated strong demand, with production and sales nearly doubling both month-on-month and year-on-year.
The industry is now awaiting the government’s next automotive policy, with manufacturers warning that prolonged uncertainty could further weaken investment, production and consumer demand.