Globally, experts expect 36.2 million used car sales this year, up slightly from 35.9 million in 2023. In Europe and North America, the average age of cars in operation has risen over the past decade, from 7.4 years (Europe) and 11.4 years (USA) to 12 years now. With over 750 million passenger cars in operation across both continents, experts also anticipate growing demand for aftermarket products as the maintenance needs of these aging vehicles increase.
Statistics showed that tempering that potential revenue pot for aftermarket sales, however, is the fact that, once their cars reach 5 or 6 years’ old, people become less inclined to splash out on their maintenance, and more likely to choose budget-friendly rather than premium parts. The global automotive aftermarket is continuing to grow with sales revenue up +4 percent last year, reaching $71 billion. This is on top of a +3 percent growth already seen in 2022 versus 2021. Tyres, which account for three in every four dollars spent on aftermarket purchases, grew +4 percent compared to 2022 revenue, while car chemicals (15 percent of aftermarket revenue) were up +6 percent and spare parts up +10 percent.
| Production Of Automobiles | ||||
|---|---|---|---|---|
| Category | Installed Capacity | No. of Units | ||
| 2022-23 (July-March) | 2023-24 (July-March) | % Change | ||
| Car | 341,000 | 87,820 | 55,670 | -36.6 |
| LCV/Jeeps/SUV/Pickup | 52,000 | 26,439 | 14,544 | -45.0 |
| Bus | 5,000 | 606 | 297 | -51.0 |
| Truck | 29,000 | 2,677 | 1,502 | -43.9 |
| Tractor | 100,000 | 22,626 | 36,133 | 59.7 |
| 2/3 Wheelers | 2,500,000 | 925,943 | 842,905 | -9.0 |
According to the Ministry of Finance, Government of Pakistan during July-March FY in 2024, compared to the corresponding period last year, in all auto sectors there was a massive fall except for farm tractors. Total tractor production during the period under review was 36,133 units, compared to 22,626 units produced previous year, explaining a rise of 59.7 percent. Passenger car production was down 36.7 percent during July-March FY 2024, with 55,670 units compared to 87,820 units produced during the corresponding period last year. The fall in production has been in almost all passenger car segments because of persisting import restrictions and import quota restrictions tied to the new mandatory export requirements.
Statistics showed that the production of heavy commercial vehicles, i.e., buses and trucks, recorded a negative growth of 51 percent and 43.9 percent, respectively, during the period under review. Bus productions were registered 297 units during July-March FY 2024 compared to 606 units produced during the corresponding period last year. In the case of trucks, 1,502 units were produced during July-March FY 2024 compared to 2,677 units during the corresponding period the previous year. This decline is attributed to a combination of factors, from stunted demand because of high policy rates and depressed economic conditions in Pakistan.
In the two/three-wheelers sector, 842,905 units were produced compared to 925,943 units produced during Jul-March FY2023, showing a fall of 9.0 percent. The continuous negative growth in the two / three wheeler sector is because of supply constraints of parts due to import restrictions. Present statistics showed that Pakistan’s car sales rose to 27,585 units in the first quarter of current financial year, marking a 31 percent rise as compared to sales of 20,982 units in the same period of last year. Tractor sales, in particular, have been dramatically falling since the federal budget announcement in June, as the government imposed sales tax on them. This has led to significant losses for the Original Equipment Manufacturers (OEMs) producing small tractor parts, putting their survival at risk. As Pakistan is an agricultural economy, the government introduced farmer-friendly strategies to promote the sector. Unluckily, the tractor industry, which could play a key role, is facing a tough time. The government of Pakistan must take immediate steps to revive this struggling sector. In the case of trucks and buses, despite the construction of highways and motorways, sales volume is still not at a satisfactory level. The motorcycle industry, on the other hand, is rebounding, showing a promising growth as it remains a popular choice among the middle class. The car industry is also facing challenges with no optimism seen for 2025.
Although the State Bank of Pakistan (SBP) has lowered policy rate, it has not led to a significant surge in car sales. Further reductions in interest rates are needed. Experts recorded that the car industry will not gain momentum until interest rates drop to single digits. While PAMA data shows an improvement compared to previous year, it is not mainly encouraging. The industry is grappling with political unrest, economic challenges, and recession.
According to PAMA, sales of trucks and buses rose by 74.7 percent to 772 units, and 60.4 percent to 154 units, respectively. Jeep and pickup sales grew by 51.5 percent to 7,517 units. Meanwhile, sales of two- and three-wheelers (motorbikes and rickshaws) surged by 19 percent, reaching 320,187 units. However, farm tractor sales declined again by 56.9 percent, with 5,206 units sold, as farmers struggled to purchase new tractors because of poor agricultural yields, worsened by climate change.
In last I would also like to mention here that the world map of automobile manufacturers has changed a lot in the last years. The industry has been transformed by many company mergers, which have given control of the market to a few giants. Moreover, the rise of Chinese brands and manufacturers marks the beginning of a new era in the automotive industry.