STAFF REPORT
KARACHI: Automobile Assemblers in Pakistan said on Saturday that they expect a demand contraction of 47% in the financial year of 2023 due to several factors including a surge in financing costs.
Automobile Industry
According to Automobile Assemblers, the demand is expected to further contract in the automobile sector due to a surge in financing costs, higher prices, and a slowdown in Pakistan’s economy.
It said that prevailing external situations may intensify import restrictions while the dwindling of foreign exchange reserves and concerns about external funding availability may trigger a longer intensified import restriction.
The data showed that lower fixed cost coverage amid a drop in utilization levels and risk of currency devaluation is likely to hit gross margins of their auto assembler universe with an average of 4.4% in the financial year 2023 vs 5.5% in the financial year 2022.
INDUS and Automobile
It may be recalled that INDUS has recently increased prices except for Yaris which may be followed by other assemblers in the coming months. Reports said that the autos have become out of reach for many as prices have increased on average by 35% since Jan-22.
Consequently, even under constrained supply, inventories have started building up as evidenced by vanishing ‘on’ money, price lock facility, and immediate delivery available for most of the models.
