26 Apr How Economic Uncertainty Slows Down the Car Market?
The economy of any country or region can be defined in terms of its production and consumption of goods. It also includes the services and supply of money. Economic growth for any country and region is very crucial. Economic growth implies a rise in real GDP; effectively this implies a rise in national income, national output and total expenses. Economic growth should empower a rise in living standards and the larger consumption of goods and services. Subsequently, economic growth is often considered as the ‘holy grail’ of macroeconomics.
Economic uncertainty implies the future position for the economy is impulsive. When people discuss economic uncertainty, they usually imply there is a high probability of negative economic events. Economic uncertainty could include a forecast of a higher and unstable inflation rate, negative economic growth, the higher rate of unemployment, devaluation of your currency and changes in economic structures.
Economic Uncertainty in Pakistan:
Macroeconomic uncertainty, investment, and economic growth are empirical issues in countries, especially in developing countries. Pakistan is a developing country and Pakistan’s economy is currently facing many problems. One of these problems is uncertainty. While the recent two years have been good for corporate results, especially for companies locked into the local market, the outlook going ahead is getting murkier continuously. Nobody knows what will be Pak Rupee’s value in the next six months and the rise in global oil prices further worsen the condition of ever under pressure Rupee, consequently, there is a certain possibility of high inflation. This then implies that interest will undoubtedly go up in the coming months and going by the account of various financial experts, could reach 12% before the year is over. Keeping in mind, in not too distant a past – back in Benazir’s era – the Pak economy saw damagingly high-interest rates, reaching as high as 24%.
Such economic uncertainties affect all industries and businesses. No matter either they are working on a large scale or small scale. The automobile Industry is also affected by such emergent conditions. Many small scaled businesses and startups like Rent A Car Lahore, Rental Cars Islamabad, and many others like this in different cities of Lahore face tough time due to this economic uncertainty. The economic uncertainty of Pakistan not only affect small scale businesses, but it also has a great influence on car manufacturing industries, industries making OEMs and Spare parts of vehicles and business dealing with sales of vehicles. It also disturbs the imports of a different car. Economic uncertainty affects the car market in many ways, some are listed below:
Car Manufacturing Industries:
Car manufacturing industries of any country like Toyota, Honda, Pak Suzuki, and many others feel the pressure if the economy of the country is going through a tough time. Because uncertainty increases the inflation rate in the country, that increases the manufacturing cost of vehicles and that result in the increased prices of cars collectively.
Import of Foreign Sports Cars:
Economic uncertainty has a very bad effect on the imports of the country. Especially when it comes to the car market, imports of many sports car and high-speed cars are badly affected by this economic uncertainty. Because these uncertainties decrease the value of your currency and imports had to face a severe financial crisis. If the economic condition of any country is impulsive, it makes the currency of that country unstable.
Increased Car Prices:
Due to uncertain economic conditions and high inflation rates, the price of cars increases drastically. People cannot manage to pay for brand new cars due to their increased rates. People choose to use Rent A Car rather than using personal cars for their personal needs and for domestic uses.
Keeping a car and taking care of all of its maintenance related stuff is not easy to afford for a common man especially in a country whose economy is facing many ups and downs. For a middle-class family, it is very hard to keep a car and bear its maintenance expenditures with other necessities of living in such high inflation.
Oil prices also depend on the economy of a country. The economic uncertainty of a country, especially in a developing country like Pakistan, resulting in a sudden increase in oil prices. With the increase in oil prices, people tend to use public transport in spite of using their personal cars. Many employees either prefer to use Cheap Rent A Car in Lahore and in different cities of Pakistan or they use office transports for their needs.