Arooj Zulfiqar

Pakistan's automotive industry is showing robust signs of recovery, contributing to a wave of positive economic momentum in the first quarter of Fiscal Year 2025, reports WealthPK.

“The automotive sector’s revitalization not only signals an increase in the consumer demand but also reflects wider economic resilience and recovery,” a senior representative of Pakistan Automotive Manufacturers Association (PAMA) told WealthPK on the condition of anonymity. The automotive sector recorded a significant double-digit growth in both production and sales during the period. According to the data released by the Ministry of Finance in a monthly outlook for October, the country's automobile production rose by an impressive 18.1% from July to September, while sales experienced a nearly parallel increase of 17.0%. This growth trajectory signals a potential rebound in the industry, though previous economic challenges and uncertainties impacted the automotive market.

Notable increases across several vehicle categories led the recovery. Car production grew by 29.9%, reflecting an increased consumer demand and improving confidence in the domestic market. Additionally, production of trucks and buses surged 95.5% -- a potential indicator of strengthened activity in commercial and infrastructure development sectors. The category of jeeps and pick-ups also contributed significantly, with its production up by 34.1% year on year. According to the PAMA representative, “This broad-based growth underscores the sector’s resilience and suggests that the demand is climbing across both personal and commercial vehicle segments – a positive development after the previous fiscal downturns impacted the industry.” He said, “A more stable economic environment and eased inflationary pressures have improved purchasing power for the consumers, directly impacting the vehicle demand.

Additionally, government support through policy reforms aimed at localization has reduced dependence on the costly imported components, making production more sustainable and affordable. “Prior to this positive development, the industry had been grappling with a decline in vehicle sales, primarily driven by a confluence of challenges. While this increase is a welcome development, the challenges in Pakistan's automotive industry persist. To address the challenges, the policymakers, manufacturers, and financial institutions must collaborate to create an environment that fosters affordability and accessibility,” he said. He further said, “To further support the sector, the government must actively promote policies to localize auto parts manufacturing in order to reduce reliance on imports and stabilize costs.”

Credit: INP-WealthPk