Pakistan Automobile Industry Analysis 2020

In 2020, growth of almost every industry was effected as the consumption of goods was very less as compared to its production. Similarly, automotive industry also faced similar situation and went through constant decline as according to research there was not a single car sold in Pakistan in the month of September and the industry was completely dead. People were even struggling to fulfil their basic needs so in this situation no one will prefer to buy a car. Automotive industry news in the new concern of people due to fluctuation in the prices.

There was an adverse effect to automotive industry as sales had dropped drastically and profit margin for companies was reduced. 2020 was a tough year for vendors as they faced heavy losses and made a very little profit. Original equipment manufacturers helped them in this moment of crisis as they helped  them by paying direct cash to them. This provided them some ease in business and they maintained their position in market. Indus motors provides its vendors similar amount of cash as to which they placed orders to them. This was provided in the form of interest free loans. It resolved the liquidity problem of vendors.

According to data released by Pakistan Automotive Manufacturers Association, we can see a decrease in percentage of the vehicles sale in 2020 in Pakistan as compared to 2019. Trucks sale was decreased by 44.8pc, buses 30.6pc, jeeps 49.7pc, LCVs (pickups) 47.3pc, farm tractors 37.6pc and two-and-three wheeler was decreased to 11pc. This great decrease in the demand has affected the production very much. Local manufacture industry is facing a constant decline which is causing unemployment.

Another factor in the decreased sale of cars was that government imposed heavy taxes on the automotive vehicles. The withholding tax on the locally imposed vehicles was increased up to Rs. 200,000 per unit. Due to tax increases, buyers were further discouraged to buy new vehicles. However, this WHT policy will not be applied on electrical vehicles for the time being. Increase in tax rates gave benefit to government as economy is struggling at the moment due to many factors but for the buyers it is a tough time as price of everything is raised and government has not increased salary of employees.

In the current scenario, prices of used cars in also high as people are not tending to sell their car because of the increased price of the the new cars. So those who want to buy a new car are also struggling because of the increased price as compared to the previous year. According to latest stats the sale and purchase of the automotive vehicles is very limited because of the ongoing economic condition of the country.

We hope that all this will end soon and people will get back to normal life soon. Business conditions will improve which will benefit the producers as well as consumers. Automotive industry will rise soon as it is a prediction by the economics experts. We just have to be patient and hope for the best.