By Ayesha Mudassar ISLAMABAD, May 26 (INP-WealthPK): Car sales dropped by 18% to 18,625 units in April 2021-22 due to limits imposed on auto financing, an increase in the rate of taxes on imported cars, and a large appreciation of the US dollar against the rupee. As car assembling in Pakistan is mostly dependent on import of semi-knocked-down or completely-knocked-down kits, rupee devaluation made the imports more expensive, forcing car makers to raise prices every now and then, reports WealthPK. According to Pakistan Automotive Manufacturers Association (PAMA), the decline in car production in April is mainly led by below 1000cc segments, where Suzuki Alto sales halved to almost 5,009 units, and Suzuki Bolan declined to 860 units from 1,295 units in March 2022. The sales of Suzuki WagonR declined by 13% from 2,104 units (March 2022) to 1, 823 units (April 2022). However, Suzuki Cultus sales expanded to 1,745 units, registering an astronomical increase of 470%. A decline in the sales of Honda cars, Suzuki Swift, Toyota Corolla, Hyundai Elantra was also observed in the 1300cc and above segment during the period. The sales of trucks, buses, jeeps, pick-ups, farm tractors and motorcycles also showed a decreasing trend in April compared with the previous month, according to PAMA. The sales of motorbikes and three-wheelers in the country witnessed a decrease of 4.1% during the first 10 months (July-April) of the current fiscal year 2021-22. Similarly, production of cars decreased by 20%, trucks by 17%, buses by 18%, light commercial vehicles (LCVs), vans, and jeeps by 21%, and motorcycles and three-wheelers by 10%. The sale and production momentum remained positive in April compared to the same month of the previous year, mainly due to economic recovery as the demand rebounded after the Covid-19 pandemic, the launch of new car models, and addition of new customers. The entry of new manufacturers in the sector thanks to the government’s flexible policies has also contributed to the rise in car sales in the country. The automobile sector is one of Pakistan's fastest-growing industries, employing over 3.5 million people and accounting for 3% of the country's GDP. It contributes around Rs50 billion ($310 million) to the national exchequer each year, according to WealthPK. The dramatic price increases are due to higher freight charges, expensive raw materials, and adverse rupee-dollar parity as assemblers import two-thirds of the auto parts for vehicles assembled in Pakistan. Efforts, however, should be made to enhance foreign investment in the sector and achieve a targeted level of localisation to help create employment opportunities and earn precious foreign exchange. This would also help save on imports through import substitution.