Pakistan’s automotive sector has seen a significant boost in sales during the first four months of the current fiscal year, with a notable 46.7% increase in passenger car sales, reaching 30,625 units. This surge is attributed to the country’s improving economic conditions, particularly driven by the gradual reduction in interest rates, which has positively impacted consumer confidence and spending.
According to data released by the Pakistan Automotive Manufacturers Association (PAMA), other vehicle categories have also experienced substantial growth. Sales of trucks rose by 82%, reaching 1,074 units, while bus sales increased by 66.4%, totaling 203 units. Sales of jeeps and pick-ups rose by 60%, with 10,068 units sold. Meanwhile, two- and three-wheeler sales, including motorcycles and rickshaws, climbed by 23.4%, with a total of 457,880 units sold.
However, the tractor segment continues to struggle, with sales dropping by 59.9%, amounting to just 6,939 units. Despite Pakistan’s agrarian economy, the tractor industry has been facing challenges, largely due to policy changes introduced in the 2024-2025 federal budget. While efforts are being made to resolve issues, particularly regarding sales tax challenges, the sector is expected to show gradual improvement in the upcoming months.
Mashood Khan, an auto sector analyst and former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), pointed out that the tractor industry is struggling, but the overall outlook for the auto sector is positive. He believes that the reduction in interest rates by the State Bank of Pakistan (SBP) has boosted market confidence, which has led to higher car sales, especially in segments such as trucks, buses, and jeeps.
The auto financing environment has also improved, with some Original Equipment Manufacturers (OEMs) offering interest-free financing options, which has helped attract customers back into the market. This shift is expected to sustain the momentum for the remainder of the fiscal year, despite challenges faced by certain sectors, particularly tractors.
Khan also highlighted the growing interest in electric vehicles (EVs) in Pakistan, especially in high-income segments, following a recent auto show in Lahore. While EVs have sparked interest among wealthier consumers, they remain out of reach for the majority of the middle class due to their high cost.
Looking ahead, Khan expressed cautious optimism, forecasting that while the overall auto industry is likely to improve, it might fall short of the target of selling 250,000 units by June 2025. However, he expects sales to reach approximately 125,000 units, a significant recovery compared to the challenging period in 2023.
Topline Research also pointed out that the surge in car sales is driven by improved auto financing conditions and a general sense of optimism in the market. As interest rates continue to decline, further increases in auto sales are anticipated, particularly with the introduction of new hybrid electric vehicles (HEVs) and EVs.
In conclusion, while the overall auto industry in Pakistan is showing signs of recovery, challenges remain, especially in the tractor sector. However, with continued improvements in financing and new vehicle models, the automotive market is expected to grow in the coming months, providing a boost to the country’s economy.
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