Pakistan’s vehicles market

Any market’s economic trends are often witnessed through the trends in the sales of its cars and motorcycles. So goes the conventional wisdom among analysts worldwide as they glance at the economic performance of one country after another.

And that may not be too different in the case of Pakistan where the country’s automobile manufacturers are witnessing early signs of hope. According to data shared by equity research houses in Karachi that regularly track this sector, Pakistan’s automobile sector witnessed a 50 per cent rise in car sales during the first eight month of the financial year which began in July 2024 and will end in June 2025.

For Pakistan’s low spending consumers, the sales of motorcycles and three-wheelers including rickshaws increased by 30 per cent during the same period. This recovery was made possible by lower interest rates that allowed buyers to get more affordable loans from Pakistani banks.

Other factors that have helped this trend are an improvement in confidence among consumers including car buyers, as well as fresh inflation beginning to slow down massively. During this eight month period (July 2024 till February 2025), Pakistan saw the sale of just below 90 thousand vehicles down from just below 60 thousand vehicles during the same period during the year before.

Additionally, the sale of two-wheelers and three wheelers grew to 950,000 or up 30 per cent during the same period from a year before. For a large number of Pakistanis, this trend has also been helped by a significant fall in the growth of inflation. In the latest estimates for inflation, the growth in this trend has fallen below two per cent annually.

This is significantly below annual inflation at 20 per cent during the end of 2023 and early 2024. However, in spite of these trends there are gaps in Pakistan’s economy. Analysts say, a full economic recovery is still waiting to arrive. The number of buyers of new vehicles at just 90 thousand represent a very small segment of Pakistan’s population of more than 240 million.

Pakistan’s overall national economic growth rate stands at below three per cent annually. This is roughly equivalent to Pakistan’s annual population growth rate. In other words, the size of Pakistan’s economy is growing annually with the same proportion as the country’s population growth rate.

Meanwhile across Pakistan, almost 40 per cent of the population is estimated to live in poverty. This accounts for nearly 100 million people. For Pakistan, an impressive recovery requires a large number of people from this segment to begin improving their quality of life.

Pakistan’s economy based on recent trends has indeed shown some signs of recovery. But the indicators still suggest that for stability to return, there is a need for many more economic indicators to become positive and with a much larger margin.