2021 will be a ‘Historic Year for the Pakistani Auto Market’. Here’s why
It should be noted that in 2018, 78,000-80,000 used cars were imported; however, this number plunged to only 10,000 cars in 2020.
According to reports, Pakistan’s auto sector is on
a the path to handsome recovery. Experts suggest that in 2021, Pakistani will launch the largest number of new cars. Arif Habib Limited analyst Arsalan Hanif said:
It is for the first time in the history of Pakistan that more than 15 new cars are being launched across the country in a single year. We expect the auto sector to outperform this year for a few reasons.
Reasons for Handsome Recovery
The research house listed all the new cars launched in January 2021, including United Motors’ Alpha, Toyota’s Corolla X, Changan’s Alsvin, and Proton’s X70. The experts further highlighted that new models were launched in February as well, which included the ZS by Morris Garages (MG), the Sorento by Kia Lucky, and the Saga by Proton.
According to the research house, new vehicles expected to be unveiled in March are as follows:
- The Corolla Cross by Toyota
- The Elentra by Hyundai Nishat
- The X25 by BAIC
Following these vehicles’ launch, the Swift by Pak Suzuki and the electric vehicle ZS by MG will be unveiled in April.
Although the number of new cars expected to be introduced in the local market this year was around 20, uncertainty looms over the launch of a few models.
He further stated:
When the discount rate is low, automobile financing grows faster, and as a result, the sector witnesses a surge in sales.
As per Hanif, auto financing soared from Rs. 211 billion to Rs. 262 billion in the past six months – a jump of Rs. 51 billion. The analyst stated:
Relatively low interest rates play a significant role in raising the number. If the discount rate stays stable or declines, the auto sector will see further growth in sales. When the economy is in a growth phase, consumer spending increases automatically, which benefits the auto sector.
It should be noted that in 2018, 78,000-80,000 used cars were imported; however, this number plunged to only 10,000 cars in 2020. At the time, the policy against used car imports created a considerable gap, and new car assemblers such as Lucky Kia Motors and Hyundai Nishat took benefit of this gap. Talking about the policy, Hanif said:
This policy is also good for the local automobile parts manufacturers. New companies entering the country would have to buy auto parts from local manufacturers, which would enhance auto parts manufacturing in Pakistan.
In concluding the findings, Hanif stated:
We see this year as one of the best for the auto sector. Old players will witness robust growth, while new players will be in the limelight with the launch of new car models.
Topline Research analyst Fawad Basir said:
New companies have forced the old original equipment manufacturers (OEMs) to introduce fresh models with better features, higher fuel efficiency, improved safety standards, comfort, and performance.
He further stated:
The automobile sector is growing as a whole, and we expect car sales to touch 200,000 in 2020. At a high point, this number was 330,000 units; therefore, there is still plenty of room for the auto industry to grow as macros improve.
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