Decline in CKD Kit Imports Hits Record Low

The impact of the former PDM government's import restrictions on Completely Knocked Down (CKD) Kits, implemented to manage the current account deficit, continues to plague Pakistan's domestic car sector. Consistent production cuts, falling sales, and uneven price rises are diminishing consumer spending power and influencing the current narrative.

CKD Kit Imports at an All-Time Low

Recent reports indicate a substantial 58% decline in the import of CKD kits, totaling $23 million last month, compared to the $54 million recorded in September—an even lower figure than observed during the Covid pandemic.

Looking ahead, forecasts suggest further declines in car production, exacerbating the existing downward trend in sales. According to the latest report from the Pakistan Automotive Manufacturers Association (PAMA), car sales in October 2023 witnessed a 26% month-on-month drop, with 6200 vehicles sold compared to 8312 units in September.

Year-on-Year Decline and Impacts

In a year-to-year (YoY) comparison, there was a significant 54% decline, attributed to factors like rising car prices, expensive auto financing, and a notable erosion of purchasing power.

The import of Completely Knocked Down (CKD) kits for buses and trucks experienced a staggering 92% decrease to $1.5 million in October, down from $18 million in September. Similarly, there was a 57% decline in the arrival of kits for heavy vehicles, amounting to $56 million during the first four months of FY24 compared to $131 million in the corresponding period last year.

Localization as the Industry's Savior

The article emphasizes the critical role of localization as the industry's savior.Assemblers in Pakistan are encouraged to focus part localization for cost-effective production, job development, healthy competition, higher quality, and foreign exchange conservation.

Encouraging the reduction of imports for CKD parts available from local vendors and manufacturer using domestic resources is seen as essential. This shift not only strengthens the domestic industry but also alleviates challenges faced by the auto vending sector, currently under significant strain.

A Call for Comprehensive Localization Plans

The article concludes with a call for automakers in the country to devise a comprehensive plan to accelerate localization efforts, moving beyond lamenting the challenges faced.

AASMA MAJiD

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