Car sales in June reached an 18-month high, according to the Pakistan Automotive Manufacturers Association, but that still did not stop the final figure for 2023-2024 registering an 18 percent decline from the previous year. The June figure of 13,300 units was a 21 percent increase on the figure for May, and represented a 120 percent increase in June 2022. Car sales are an important metric for industrialized economies, because they bulked large in terms of both jobs and revenues. Car makers in Pakistan are not that important, but are definitely important not just for the government, but also for those who want to gauge how the economy is performing. For one thing, increased sales reflect increased purchasing power. That means that the decline in the inflation rate is being felt by the consumer. Interest rates being high was also a drag on the market, so its being cut will make car financing easier, which in turn will act as a fillip to sales. However, the lowering of the rate has not had time to produce that effect, especially as if the inflation rate goes down further, so will the interest rate. In that case, care financing will become all that much easier.
Automotive manufacturing the world over is on the verge of a shake-up, and the Pakistani industry is also to go through that. The automotive world is about to be hit by the Electric Revolution. Pakistani manufacturers are well aware of this, and are perhaps more open to the idea than their counterparts in industrialized countries. However, while manufacturers are gearing up to enter the electric vehicle market, the easy availability of electricity still awaits development. Actually, the country has the required capacity for renewables, whether wind, solar power or hydel. However, they have to be developed.
That is where the government comes in, and not just in providing cheap and plentiful electricity from renewables. Instead of taking the credit for the recovery of the automotive sector, the government should have a clear target for the automotive sector, for the inevitable transition away from the petrol economy, and should work to ensure that that target is given all the facilitation it needs. Just as the government was crucial in the development of the petrol-based automotive sector, even though it acted in a rather hit-or-miss fashion, it will be essential in the move to a renewables-based sector.
