Karachi: The auto industry is poised for a significant recovery in September 2024, with sales volumes of the top three major companies expected to hit around 10,000 units. This marks an increase of 45% month-over-month and 40% year-over-year, registering as the second-highest rise since December 2022.

According to JS Global, the growth in auto sales is primarily driven by Pakistan Suzuki Motor Company (PSMC) and Indus Motor Company (INDU), each anticipating a 50% year-over-year rise in volumes. This surge is expected to bolster the first and second quarter fiscal year 2025 volumes by 34% year-over-year, with similar trends across all three companies.

The recent decline in the Karachi Interbank Offered Rate (KIBOR), now at 14%, along with banks offering attractive rates on auto loans, is seen as a strategic move to boost the Advance to Deposit Ratio (ADR) and circumvent higher taxes. However, the State Bank of Pakistan’s existing restrictions on auto loans, capped at Rs3 million per loan, remain a limiting factor. Looking ahead, a modest recovery in auto sales volumes is anticipated, with the sector’s profitability likely to depend on factors like consumer purchasing power, declining interest rates, and the absence of additional regulatory burdens on the already challenged industry.