KARACHI:
Passenger car sales jumped by 32.2% to reach 83,269 units in the first 10 months of the current fiscal year. This surge, compared to the same period last year, resulted from the State Bank of Pakistan (SBP) lowering interest rates and a subsequent boost in buyer confidence.
Data from the Pakistan Automotive Manufacturers Association (PAMA) revealed that vehicle sales, including two, three, and four-wheelers, experienced a notable increase. However, farm tractor sales took a hit, declining by 35.8% to 24,832 units. The drop in tractor sales stemmed from various factors, such as climate change, lower crop yields, reduced profit margins on agricultural produce, and a severe water shortage in Sindh, making farmers hesitant to invest in new equipment.
Jeeps and pickups recorded a significant rise of 69%, totaling 28,063 units. Similarly, truck and bus sales climbed by 88.8% to 3,261 units and 68.6% to 624 units, respectively. Meanwhile, motorcycles and rickshaws also saw an uptick, growing by 30.4% to 1,227,956 units.
Shafiq Ahmed Shaikh, an automobile consultant, attributed the rise in car sales primarily to the reduction in interest rates announced by the SBP. He noted that banks are now offering more manageable and affordable installment plans, both short and long-term, making car purchases more accessible.
Shaikh recalled that in the past, whenever interest rates dropped, car sales witnessed a sharp rise, particularly in the small car segment. He explained that when rates fell to single digits, sales jumped to around 60%. He stressed that fluctuations in interest rates significantly influence car sales.
Looking ahead, Shaikh predicted a gradual decline in current sales as electric vehicles (EVs) gain popularity. He emphasized that EVs offer enhanced features, cost efficiency, and easy access to charging infrastructure, which could lead to a shift in consumer preferences. In the near future, banks and financial institutions might also introduce attractive installment plans for EVs.
Auto sector analyst Mashood Khan highlighted additional factors driving the positive trend in the automotive market, including a stable rupee against the US dollar, consistent reductions in interest rates, and a more robust economy. He forecasted that this positive momentum would likely continue until June, benefiting cars, motorcycles, buses, and trucks.
However, Khan pointed out that the farm tractor industry has struggled since the previous budget’s agricultural policies took effect. He cautioned that the upcoming 2025-26 budget, influenced by the International Monetary Fund (IMF)’s conditions, might present new challenges for the local automotive industry. Nonetheless, he believes the new budget could play a pivotal role in revitalizing the sector.
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