CKD Imports Hit Bottom Levels

Jawad

23 Nov 2023

452

CKD Imports Hit Bottom Levels

In October, local assemblers experienced a sharp decline of 58% in Completely Knocked Down (CKD) imports, plummeting from $54 million in September to a mere $23 million. This not only marks the lowest monthly CKD import figure ever reported by the country but also falls below the average seen during the Covid era.

It's crucial to note that the monthly average for CKD imports in FY22 reached a peak at approximately $142 million. For the first four months of the current fiscal year, CKD imports witnessed a substantial 41% contraction, dwindling to $208 million compared to the $355 million recorded in the same period last year.

The substantial decrease in auto parts imports can be attributed to various factors, including the government's efforts to manage the current account deficit (CAD), restrictions on leasing imposed by the State Bank of Pakistan amidst soaring interest rates that discouraged auto financing, and a consistent decline over the past 16 months. Meanwhile, elevated car prices and inflation have further eroded purchasing power.

If this trend in declining CKD imports persists, the outlook for car sales in November and December appears grim. Recent data from the Pakistan Automotive Manufacturers Association (PAMA) reveals that October 2023 marked the worst month for local assemblers, with a meager 5,000 units of passenger vehicles sold nationwide. Analysts have already anticipated a potential 14% drop in overall sales for FY23/24.

In response to this challenging situation, Mohammad Irfan Ghani, the acting CEO of Baluchistan Wheels Ltd (BWL), highlighted the production challenges faced by automobile manufacturers due to shortages of CKD-imported parts. He emphasized the critical role of localization for the survival of the industry in Pakistan, citing advantages such as cost-effective production, job creation, healthy competition, improved quality, and the preservation of foreign exchange.

Mr. Ghani urged assemblers to seriously consider reducing imports of CKD parts that are readily available from local vendors and can be manufactured using domestic resources. Encouraging local production not only strengthens the domestic industry but also alleviates the challenges faced by the auto vending sector, currently under significant strain.

Auto Parts Imports CKD Imports CKD parts Low CKD Imports CKD imported parts Car Sales Decline Automotive Manufacturing Challenges Automobile Industry

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