Cars import plunges 80% in first quarter of FY23

The import of completely built unit (CBU) cars plunged 80 per cent during the first quarter (July-September) of the fiscal year 2022/23 due to the restrictions imposed by the government to support the balance of payments position.

According to the data released by the Pakistan Bureau of Statistics (PBS), the import of CBU cars plunged to $4.28 million during the first quarter of the current fiscal year, compared with $15.68 million in the same period of the last fiscal year.

The federal government had imposed a ban on the import of luxury and non-essential items on May 19, 2022. However, the ban was lifted on August 20, 2022 on the demand of the International Monetary Fund (IMF).

Despite lifting the ban, the cars import was negligible and recorded a decline of 95 per cent in September 2022, compared with the same month of the last fiscal year.

The overall import payment of CBU vehicles recorded a decline of 57 per cent to $15.55 million during July-September of the current fiscal year, compared with $165.12 million in the same period of the last fiscal year.

The import of CBU buses, trucks and other heavy vehicles recorded a decline of 26 per cent to $50.56 million during the quarter under review, compared with $68 million in the same quarter of the last fiscal year.

Meanwhile, the import payments for the completely knocked down (CKD) cars fell 39 per cent to $361.35 million during the first quarter of the fiscal year 2022/23. The CKD units are basic raw material for the local assembling of cars.

The CKD cars import fell to $258.15 million during July-September of 2022/23, compared with $407 million in the corresponding period of the last fiscal year.

The Pakistan’s car manufacturers have observed temporary halt in their production due to the restrictions imposed by the State Bank of Pakistan (SBP) on the import of CKD kits.

Indus Motors Company Limited, in a notice to the Pakistan Stock Exchange (PSX) on August 30, 2022 for temporary shutdown of its production, said that the State Bank of Pakistan (SBP) had introduced a mechanism to obtain prior approval for the import of CKD kits and components of passenger cars.

“The delay in the aforesaid approvals has created hurdles in the clearance of import consignments of the company, resulting in a significant reduction at the inventory levels and consequently, creating adverse impact on the supply chain and production activities,” it said.

Due to insufficient inventory levels to maintain production, the company has decided to temporarily halt its production activities, it added.

Many other car makers have also announced temporary shutdown of productions due to insufficient inventory.

The restrictions on the import of CKD units also impacted the domestic sales of the locally-manufactured cars. The sales of the locally-manufactured cars sharply declined 50 per cent to 34,472 units in the first quarter of the current fiscal year, compared with 68,897 units in the same period of the last fiscal year.