Copyright FOURIN, Inc. 2023
Pakistan’s Sales Results of Motorcycles in the First Half of 2023
In addition to the unprecedented flood damage caused by the monsoon in June 2022, Pakistan’s economy rapidly deteriorated due to currency depreciation, high inflation, and a shortage of foreign exchange reserves because of interest rate hikes in Europe and the United States. As a result, motorcycle sales by member companies of Pakistan Automotive Manufacturing Association (PAMA) decreased by 33% year-on-year from July to December 2022, and by 36% from January to June 2023. Amid sluggish sales, Atlas Honda, the largest motorcycle sales company in Pakistan, raised product prices six times from January to August 2023 due to a sudden spike in parts and raw material procurement costs triggered by the sharp depreciation of the national currency. United Auto Industries, a major Pakistani company that assembles and sells Chinese-made motorcycles, has also raised its prices several times, but its product prices are 31-45% lower than those of Atlas Honda in the same segment.
Pakistan was saved from default as the IMF approved a 3 billion USD loan to the country on July 12, 2023, and immediately disbursed a loan of approximately 1.2 billion USD on the following day, July 13. To put a stop to currency depreciation in the future, in addition to continuing monetary tightening and tax increases aimed at fiscal reconstruction, it will be also necessary to urgently foster export industries. Under these circumstances, it is expected that it will take time for motorcycle sales to recover.
It is unlikely that motorcycle sales will recover rapidly in the second half of 2023 because, in addition to the fiscal austerity that is a condition of IMF financing, inflation due to currency depreciation and soaring gasoline prices have not subsided. However, there is a possibility that demand for Atlas Honda’s products, which account for 90% of all motorcycle sales in Pakistan, will be further promoted to protect assets. The promotional campaign may also lead to an increase in demand for locally assembled electric motorcycles as gasoline prices soar.