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Reverberations can be felt across the automotive industry as demand is returning with a vengeance. In Feb-21, cumulative volumes for cars, LCVs and SUVs grew 34 percent according to the association numbers; 38 percent if Kia’s sales are included. These don’t include a number of other brands such as Changan models, Prince, and FAW which are also being locally assembled, so the total number is likely higher. Cumulatively in 8M, 24 percent higher volumes were sold this year compared to last.

A lot has changed over the past year too. Old models of Corolla were replaced by Yaris—the launch of which happened in the midst of the covid-19 pandemic; Mehran has been replaced by Alto and a handle of new global models were introduced to the market including Hyundai Tucson, Kia Picanto, Kia Sportage, D-Max and JAC pickups. Alto has been coming on strong after the leisurely phasing out of the customer-favorite Mehran while Yaris’ entry is more than making up for the lost Corolla demand, despite the model being fresh.

The industry seems to have had swift reawakening from covid-19 related downturn, arguably faster than the country has recovered from the virus itself. And while the fear that Pakistani consumers will experience a downfall in their purchasing powers and disposable incomes due to covid-19 was not entirely unfounded—plenty of survey evidence from Gallup suggests incomes were affected and jobs were lost—it seems the typical car buyer of Pakistan has remained more or less unaffected. This takes on a whole new meaning considering how much more expensive cars are today than they were last year and two years ago.

Having said that, both Honda and Toyota were the first to assert growth post-lockdown while Suzuki was invariably the last one to show up with positive growth—perhaps indicating that recovery in incomes was slower for the middle-income car buyers, and they had to think longer to make those purchases, even if they had savings lying around.

Some cushioning has been provided by more attractive car financing rates due to the downward interest rate setting. If policy rate persists until May, folks have another two months to enjoy the lower borrowing costs, though it is more likely that banks will soon start to price-in the expected increase in policy rate now rather than later.

Growth however is undeniably and the change model-mix of the industry is also fascinating to watch (see how the colors in the infographic have changed in just one year). However, the growth percentage itself should be taken with a grain of salt. Afterall, it is being compared from the time when the country was in the thick of a pandemic. Compared to 2018 numbers in 8M, volumes have declined by 44 percent. Evidently, new models are not occupying as much space as it was expected.

Full-year estimates suggest the industry would comfortably cross the 200,000 mark. But while the overall growth is worthy of attention, the real change is coming in the form of not just new model makers bringing global variants to Pakistan that are not necessarily Japanese, but also in the form of new shapes and engines. A clear shift is happening from sedan to SUV/crossovers with latter operating in at a similar price range and offering a greater value for money. The game is changing, and so are the players. Let’s watch.

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