CKD Kits Import Reaches All-Time Low in Recorded History

Jawad

27 Nov 2023

321

CKD Kits Import Reaches All-Time Low in Recorded History

The impact of import restrictions on Completely Knocked Down (CKD) Kits, imposed by the former PDM government to address the current account deficit, continues to afflict Pakistan's local auto industry. Persistent production cuts, declining sales, and uneven increases in car prices are eroding consumer purchasing power, shaping the ongoing narrative.

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.

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.

The article emphasizes the critical role of localization as the industry's savior. Assemblers in Pakistan are urged to prioritize the localization of parts for cost-effective production, job creation, healthy competition, improved quality, and conservation of foreign exchange.

Encouraging the reduction of imports for CKD parts available from local vendors and manufacturable 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.

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.

CKD CKD Kits Import CKD Kit Record Low Import CKD Kit CKD Historical Decline Auto Manufacturing

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