In two more months, the automotive industry would have reached the half-way point into the fiscal year that is FY24, marking a new low for newly assembled car sales in 20 years. Yes, that’s two decades. In fact, the 20-year average for annual sales stands at roughly 174,000 and in FY24, automobile sales are set to make about 81,000 units in volumes. In 4MFY24, total volumes are down 44 percent.

In Oct-23, the industry continued its losing streak with month on month decline in sales of 26 percent, which are down by half compared to Oct of last year. In the past four months, the industry—as reported by the Pakistan Automotive Manufacturers Association (PAMA)—has sold a monthly average of exactly 6,790 units. This includes not only passenger cars, but also LCVs and SUVs. Meanwhile, the share of passenger cars plunged from 85 percent in FY21 to 77 percent in FY24 (thus far) as more SUVs and LCVs are bought compared to passenger cars.

The truth is, assemblers are visibly struggling with the lack of demand. They have been keeping their factories closed for business as the market is dried up. As volumes dwindle, assemblers are reducing prices and offering a variety of deals to get new foot traffic into their dealerships, but Oct-23 sales suggest car buyers are waiting it out.

For one, a large share of car buyers has already exited the market as cost of borrowing is too steep to absorb. They will be back when interest rates begin to move downward which would once again spur auto financing doled out by banks. Until then, assemblers have to contend with cash purchases. Non-luxury car buyers are either dipping into their savings or trading down their current larger vehicles for something smaller (like Alto) that is spunky and fuel-efficient; not to mention, the only vehicle passing off as affordable.Other cars in the same league i.e., small and fuel-efficient are used imported cars that are more expensive than the existingAlto variants.

Others who are still flush with cash are dipping their toes into new market offerings in the SUV categories which are available at various price points. Kia Sportage is certainly a market favourite (not included in the numbers mentioned here) and others like Hyundai Tucson and Sazgar Haval have shown growing volumes. Mean while, Chinese new comers like BAIC and Chery havealready begun to display lethargy. Even where affordability or fuel-efficiency is not a factor, there is growing fatigued in a segment that has been showing immense promise since FY21. And don’t forget, this is where assemblers have invested into and where they make money. Even if this doesn’t raise alarm bells, it is evident that the current state of the industry will leave wounds and victims behind.