News Analysis
The Pakistani car market has been booming for the past couple of years. New models are ready to break into the market in 2018 and 2019 but at the same time the used car market seems to be flourishing as well. The imports of used cars climbed to 65,723 units in 2017 rising by close to 70 percent from the previous year.
Minivans as well as sport utility vehicles (SUVs) have become more popular in Pakistan. SUV imports grew by 59 percent to a total of 7,758 units where as imports of vans and pickups increased at a slower rate by 9 percent to a total of 3,154 units.
Despite the massive increase in car imports, Hyundai, Kia and Renault are all planning to set up plants in the country and German giant Volkswagen is set to launch two models in Pakistan as well.
Toyota dominated the market for used cars in 2017 and showed a steady increase in imports. The compact yet efficient Vitz was the most popular imported car with 8,680 units arriving last year. The Toyota Aqua joined the list of popular models by the Japanese automotive giant as it showed a 96 percent increase in imports as they increased from 3,622 in 2016 to 7,123 in 2017.
Suzuki also had a very successful year as three of their models made the list for the most imported cars of the past year. 5,088 units of the Suzuki Every were imported to Pakistan making it the most successful Suzuki model imported in 2017. Followed by that were the always popular Suzuki Alto and the surprisingly cheap Suzuki WagonR with 4,158 and 3,574 units being imported respectively.
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Honda is an already well-established company in Pakistan and their local models the Civic and the City have been a popular feature on the streets of Pakistan for years. Last year they introduced a brand new affordable 5-seater vehicle known as the BR-V and also revamped the Civic adding a new sporty exterior and brand new colors like carnelian red. This helped Honda Atlas, as the company is known in Pakistan, to have their best ever year in terms of profits with a total net profit of Rs. 5.12 billion.
“Time has come for the existing players to make prompt investment in capacity expansion, improve localisation, introduce new models and reduce delivery time to eliminate the menace of premium,” he said.
The Honda Vezel was a new model introduced to Pakistan. This model is not assembled in the country so the price is higher than local models but it was still one of the most popular imports of the last year with 2,431 units.
Data revealed that the total volume of vehicles imported into Pakistan increased by 65 percent from 46,500 in 2016 to 76,635 in 2017. With the introduction of ride sharing services like Careem and Uber, analysts predicted a decrease in the purchasing of cars in Pakistan. Despite the popularity of both services, car usage as well as imports and local purchases of cars have increased exponentially.
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The Standing Committee on Climate Change is actively trying to get rid of the import duty on hybrid vehicles. This will cause a further increase in car imports to Pakistan, as the current import duties on vehicles are very high. Removing these tariffs from hybrid cars will help the public import cars for a lot less and will also help people contribute positively to the environment of Pakistan by driving hybrid cars.
The Toyota Aqua joined the list of popular models by the Japanese automotive giant as it showed a 96 percent increase in imports as they increased from 3,622 in 2016 to 7,123 in 2017.
Pakistan Association of Automotive Parts and Accessories Manufacturers’ former chairman Aamir Allawala stated that the local manufacturing industry lost estimated revenue of Rs. 23 billion last year.
The former chairman added that he believes the rise in imports of used cars was the biggest obstruction to investment by existing assemblers, new entrants and part makers.
“Time has come for the existing players to make prompt investment in capacity expansion, improve localisation, introduce new models and reduce delivery time to eliminate the menace of premium,” he said. He added that a production increase would boost tax revenue and also create jobs.
Despite the massive increase in car imports, Hyundai, Kia and Renault are all planning to set up plants in the country and German giant Volkswagen is set to launch two models in Pakistan as well.