Situation-Facing-by-Automative

Situation Facing by Automotive Industry of Pakistan

Overview

The automobile industry in any country is viewed as a vibrant division. Ordinarily alluded to as the mother of all the industries, the auto sector tends to be the foundation of the economy and steers the overall economic development trajectory to a broader and viable path.

Interestingly, nations with significantly small populace than Pakistan have come out as global leaders in the auto sector. Universally, governments give huge significance to the vehicle business because of its forward and backward linkages in economy, employment generation, and modernization rate, and so forth. 

The pace of development and consistent technology up-gradation in the international auto sector keeps it well ahead in technical terms. Pakistan’s auto sector is no exemption. Other than keeping up with modern and innovative developments, the segment follows globally acclaimed best procedures to offer autos that cater to individuals’ needs. The auto sector serves numerous socio-economic sections of the Pakistani populace.

Situation Pakistan’s Automotive Industry is facing

Even though Pakistan’s auto segment is progressing, but it has numerous difficulties. The automobile business announced a 6 percent decrease in sales in the initial two months of 2019 for the first time since the financial year 2015.

The car business had been battling as three factors specifically increasing prices due to rupee devaluation, increasing policy rate, which has been making vehicle financing less luring for the purchasers and restriction on non-tax filers were affecting sales.

Gigantic devaluation of rupee against the US dollar has prompted the increase in the prices by the current carmakers, an immense drawback of assembling autos as opposed to manufacturing.

The crisis of efficient labor is a major weakness for the vehicle industry in Pakistan. The initial investment is high in the automotive divisions because of which new organizations are always hesitant to invest unless the government permits significant incentives.

Moreover, new organizations assess the market in terms of volumes. If they think they won’t get the volumes then their projects turn out to be financially unviable. Subsequently, such examinations are to be done carefully because the exit isn’t a choice after investing.

Budget proposals

The All Pakistan Motor Dealer Association (APMDA) wants the government to permit the import of used vehicles without age restriction. It has also requested the government to decrease tax and duties to control smuggling. 

It is, anyhow, a general impression that the government is probably not going to pay any attention to the requests. 

The import of used vehicles has seen a monstrous bounce in recent years. In huge part, the increase is because of the absence of choice in the local market, quality issues within the segment, and capacity constraints the business faces. 

A sum of 79,000 imported used vehicles was sold in 2017 – a massive jump from 55,000 autos in 2016.

Environmental Concerns

One of the significant shortcomings of this area is related to environmental concerns. Vehicles are the primary reason for air pollution in Pakistan’s main cities specifically.

Fundamentally vehicles that keep running on diesel pollutes the air at in enormous level consequently a vigilant ecological regulator with a good skill set is required for all types of vehicles no matter it is for personal use or any Rent a car business.

Political Temperature

The political turbulence not just makes a risk to the automobile industry but also almost all industries in Pakistan. It is significant for the present government to keep the political temperature in control particularly when it has the full backing of the real decision-makers so they should simply concentrate on governance rather than pointlessly making a political scene.

Potential remains

Pakistan’s low motorization rate of 17 for every 1,000 demonstrates that there is great potential in the market that gave per capita income growth in the country. India, a nation of 1.32 billion, has a motorization rate of 22. Japan and some European nations have a motorization rate of 600. 

Pakistan’s per capita income remains at $1,629, as indicated by the Pakistan Bureau of Statistics. The Planning Commission says Pakistan’s per capita income could reach up to $4,200 by 2025, with the country’s economy getting a major lift from the China-Pakistan Economic Corridor. 

If development remains the way it has been, Pakistan could see many more vehicles on its roads.

These are the few situations that the automobile industry is facing in Pakistan. To make this situation better, we should all work together and work on our drawbacks. The government should also take necessary action against the major drawbacks of our industry. 

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