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Pakistan’s bike production drops for first time since 2000

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2 years ago

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  • Stagnant incomes, declining agricultural growth caused slump.
  • Production dropped by 34% in first five months of FY22-23.
  • Production of other companies except Honda declined by 73%.

LAHORE: Motorcycle manufacturing and sales have continued their vigorous growth, from around 100,000 bikes in 1999-2000 to 2.6 million in 2021-22, despite recession or boom. However, 2022-23 could be the first fiscal year since 2000, when bike manufacturing will drop steeply.

Does the bike slump indicate Pakistan’s worst recession?

The drop in bike manufacturing and sales may also be due to the steep increase in the price of two-wheelers.

Since bikes are purchased and used by low-income buyers, the sales might have slowed a bit if the prices remained stable, however, at current rates and almost stagnant incomes, people are struggling to make ends meet.

Another reason for the drop might be declining agricultural productivity, as most motorbike sales in the country are accounted for in rural areas. Recent floods that affected over 34 million people are a reason for slumping sales.

Motorcycle production data is from the Pakistan Automotive Manufacturers Association (PAMA), however, many motorbike manufacturers are not registered with it, and the Pakistan Bureau of Statistics (PBS) records their production data.

Most of the local bike manufacturers produce the 70cc variant, barring three Japanese manufacturers. However, there has always been a huge price difference in the retail price of the 70cc Japanese bike and the local or Chinese models.

But, the Japanese brand sales are still almost double the sales of all other brands. Currently, the market leader Japanese 70cc bike costs Rs125,000 while local 70cc variants are available at Rs80,000 to Rs85,000.

However, the statistics for last year are available that put the total motorbike production at 2.6 million. 

According to data in 2021-22, the market leader produced 1.35 million motorcycles, and the rest 1.25 million units were sold by all others, including two other Japanese brands. These Japanese brands, however, produced motorbikes of 100cc or above power. 

The PAMA statistics for the first five months of the current fiscal year give a true picture of the state of the bike industry in the country.

In the July-November 2022 period, the bike industry (registered with PAMA) produced 521,643 bikes against 797,346 produced during the same period of last year. This is a massive decline of 34% in the first five months of this fiscal.

To get a picture of the turmoil faced by different manufacturers, a further study of the PAMA statistics revealed that Honda produced 563,268 bikes in the first five months of the last fiscal. This year the production has declined to 435,390 a decline of over 22%.

United Auto Motorcycle is the next brand with the highest production. It produced 136,720 units from July-November 2021. This fiscal year during the same five months, the production has dropped to 38,957 bikes. This is a massive decline of over 300%.

Next comes, Road Prince Motorcycle, which produced 52,289 motorcycles in the first five months of the last fiscal. During the same period this fiscal, its production has declined to 14,540 units. This again is a huge decline witnessed in the industry. 

Overall the production of all other motorcycle producers except Honda declined by 73%.

This unexpected decline in motorcycle uptake has created turmoil in the industry and thousands of workers have been laid off. Some industry experts attribute the decline in bike production to the restrictions on the import of components imposed by the government.

This may be partially true but we must recognise the fact that the buyers lack the finances to buy two-wheelers at current high rates.

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It is anticipated that 150 ships would arrive at Gwadar by the year 2045, allowing the port to handle fifty percent of all imports.

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3 days ago

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In an effort to strengthen the port’s economic importance, the Federal Government has made the decision to direct fifty percent of all imports from the public sector to Gwadar Port.

By taking this action, which has the backing of the Special Investment Facilitation Council, the port’s financial situation is going to be improved.

The Cabinet will be presented with a summary of imports through Gwadar by the Ministry of Maritime Affairs, which will take place after Prime Minister Shehbaz Sharif’s recent trip to China.

When the next Cabinet Meeting takes place, Ahsan Iqbal, the Federal Minister for Planning, Development, and Special Initiatives, will examine the Chinese offer for the Karachi to Hyderabad Section of the ML-1 Project and bring it to the Cabinet.

Company preparations for the Shanghai International Import Expo, which will take place in November 2024, are being made by the Board of Investment and the Ministry of Commerce of Pakistan.

One of the most important aspects of the China-Pakistan Economic Corridor is the Gwadar port, which serves as a significant commerce route connecting China, the Middle East, Africa, and Europe. At this time, the Gwadar Port is able to accommodate two huge ships, and by the year 2045, it is anticipated that it would be able to handle up to 150 ships.

By developing the Gwadar Port, regional connectivity would be improved, employment will be created, and international investment will be attracted.

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The price of gold in Pakistan has experienced a significant surge.

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3 days ago

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Gold prices in Pakistan surged significantly on Thursday following two consecutive days of decline, with the price per tola rising by Rs2,000 to reach Rs262,100. This increase was in accordance with the downward trend in international market values.

The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported that the price of 10 grams of 24-karat gold rose by Rs1,714, reaching Rs224,708.

Conversely, the world gold market experienced an upward trajectory. According to the APGJSA, the global price of gold surged to $2,503 per ounce following a $22 gain during the trading session.

The local market experienced a significant decline in silver prices, decreasing from Rs50 to Rs2,900 per tola after a prolonged period.

The local market’s gold prices remain subject to the ever-changing dynamics of the international market, as well as domestic considerations such as currency exchange rates and domestic demand.

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Business

The government has not met the deadline set by the International Monetary Fund (IMF) for the approval of a $7 billion loan.

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4 days ago

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On Tuesday night, there were virtual talks between representatives of the Finance Ministry and the IMF delegation, with the main topics being external finance and income generation.

According to people familiar with the situation, no date has been set for the IMF’s Executive Board to approve the loan despite the ongoing negotiations.

Officials from the Finance Ministry informed the IMF mission about the government’s initiatives to get outside funding during the discussions. Updates on loan rollovers and fresh finance commitments from allies were included in this. According to sources, the IMF has received a schedule, and loan rollovers are expected to be finished by the end of next week.

The $12 billion in debt must be rolled over before the loan can be approved by the Executive Board, according to the IMF mission.

In the virtual discussions, representatives of the Federal Board of Revenue (FBR) conversed with the IMF team over the revenue deficit. The FBR must reach its revenue goals for this month, according to the IMF mission. As a result, the IMF has asked the FBR to submit a thorough strategy outlining how it will close the gap left by the shortfall and guarantee that revenue goals are reached.

Apart from the conversations on outside funding, there are rumors that the Finance Ministry is actively holding talks with commercial banks in order to obtain new funding. According to reports, negotiations are taking place with four distinct sources for commercial loans, which are anticipated to support the government’s overall financial plan.

Finance Minister Muhammad Aurangzeb disclosed on Tuesday that the IMF was in favor of introducing targeted subsidies. He said that qualifying recipients might receive these subsidies through the Benazir Income Support Programme (BISP).

In order to guarantee consistency, the minister announced that this week’s talks with chief ministers will focus on implementing a similar policy across the country. He was having a casual conversation in parliament with the journalists.

In response to queries about outside funding, Aurangzeb revealed a $2 billion deficit and said that talks to close this gap are progressing. He stressed how crucial it is to obtain business loans.

He went on, “At this point, there’s a need to secure an agreement for commercial loans, not exactly their issuance,” emphasizing that debt rollover negotiations are nearing their conclusion and doing well. The minister expected that these developments would shortly be reported to the governments of allied countries by relevant authorities.

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