Copyright FOURIN, Inc. 2023
Pakistan’s Automobile Sales Results in 2022
Pakistan’s vehicle sales decreased 4.2% year-on-year to 232,762 units (locally-assembled vehicles of PAMA members) in 2022. Although the first six months of the year trended at a record high pace, the second half of the year saw a drop of more than 30% compared to the same month of the previous year in five months, excluding November.
The strong sales in the first half of 2022 were due to a rebound in demand squelched by lockdowns in 2021 and the government cutting tax rates, including the federal excise tax on cars and the small car sales tax. However, in addition to the tax reduction measures ending at the end of June 2022, in May of the same year, the central bank switched the opening of letters of credit for CKD automobile parts to a pre-approval system which rapidly cooled the demand for automobiles. On top of these, substantial import restrictions were introduced and hikes in policy interest rate pushed up interest rates on loans. There is also a view that there was a last-minute demand in the first half of the year, because consumers expected the central bank to introduce tightening measures such as raising interest rates due to rising prices and declining foreign exchange reserves.