Slowdown in the auto sector has led to a 27% decline in overall import of completely- and semi-knocked kits (CKD/SKD) to $261 million in first quarter of the current fiscal year.
Of the total imports, arrival of CKD/SKD kits for heavy vehicles plunged to $67m from $114m, followed by $175m for cars from $216m and $18.8m for two-wheelers from $27m in 1QFY19. Moreover, local auto sales (including 2-wheelers) fell by 39% to 31,017 units in 1QFY20 while truck and bus sales dropped to 874 and 196 units from 2,049 and 267 units respectively.
Chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Capt Muhammad Akram while speaking to Dawn said that assemblers have decreased imports of parts and accessories due to massive fall in the overall auto sector sales.
The assemblers are also worried over built-up inventory at their plants and dealership network due to weakening sales. Muhammad Akram added that after a bad first quarter, vehicle sales are likely to remain under pressure as the year-end period is already called “slump time,” as buyers usually delay purchases in anticipation of buying new model in the first two months of next year. He said future sales from January 2020 onwards would also depend on political environment, prices and economic measures.
According to a car dealer, auto assemblers place orders for import of CKD/SKD depending on the demand from their authorized showrooms. Since sales are predicted to remain subdued, assemblers are placing orders as per slow booking trend of locally assembled vehicles.
Plunging import of raw material for the auto sector and local manufacturing is considered as an alarming sign for the country, as it would result in heavy job losses besides hitting government’s revenue collection.