Pakistan’s car sales fell to their lowest level in more than two years because of rising prices, which made people less likely to buy cars, and restrictions on imports, which hurt production even before the floods’ full effects were taken into account.
The number of cars sold in August was 8,980, 50% less than last year. The Pakistan Automotive Manufacturers Association released this information on Tuesday. That’s the lowest number since June 2020, when sold 7,325 units were during the coronavirus pandemic. In July, sales dropped to 10,378 units. Pakistan’s economy is growing less quickly because it has one of the highest inflation rates in the region and has to pay more to borrow money. A 30% drop in the rupee also makes it more expensive to import key auto parts. The government’s import restrictions to control the trade deficit also hurt the industry.
For the second month in a row, Indus Motors Co., part of Toyota Motor Corp. in Pakistan, plans to close its plant for two weeks. At the same time, Suzuki Motor Corp.’s local unit is closed because there aren’t enough imported parts. The two companies are the biggest ones that make cars in Pakistan, selling 85% of all cars there.
Wasil Zaman, an JS Global Capital Ltd. analyst, says that car sales could drop by more than 25% in the fiscal year that began in July. Catastrophic floods that hit about a third of the country in the past few weeks, killing about 1,400 people and causing about $30 billion in damage, could slow recovery.
