The third-quarter results of two major auto manufacturers have shown positive results for the third quarters of the current fiscal year, which may indicate that the economy is beginning to respond to the lowering of inflation, and the consequent decline in the interest rate. With both Indus Motors and Honda Atlas reporting an improvement on the same period last year in terms of sales, things are beginning to look up for the industry as a whole. While the interest rate affects the industry’s companies as much as it does those in other industries, the customer is also affected, with the power to buy affected by it. As the interest rate affects car financing, and as a significant amount of car sales are on the basis of car financing,
Car manufacture involves a number of downstream industries, but there are two implications for increased sales. First, many of the most vital components are imported, not manufactured here. Cars sold here mean payments abroad. Secondly, part of the profits have to be remitted abroad, as the original manufacturers are shareholders. At the same time, car manufacture does represent a more varied landscape. That the companies are doing so well indicates that they are successfully competing with all those other manufacturers who have entered the market and are offering a wide range of options for the consumer. Another challenge which is developing, is that of electric vehicles. At the moment, they are something of an oddity, but represent challenges on two different levels. First, they represent a widely disparate technology. Second, they represent Chinese technology, as opposed to the current car manufacturers, who are either Japanese or South Korean.
The decline in the international price of oil has so far not had any effect, mainly because none has been passed on to the consumers. However, if present trends continue, oil prices will continue to fall to the point where the government will have to reduce them. Whenever that happens, the sales of electric vehicles, already shaky, will become even shakier. Before looking too much towards this surge as a sign of improvement, it would be worthwhile to remember that the IMF has downgraded its global growth projection for 2025 by 0.5 percent to 2.8 percent, and Pakistan’s to 2.6 percent, a 0.5 percent cut, because of the USA’s projected new tariffs.
