KARACHI: Unrestricted imports from February onwards increased the arrival of completely knocked down (CKD) kits to $779 million in FY24 from $750m in FY23 amid sales fluctuations and plant shutdowns.

CKD imports fell drastically to $37m in January from $104m in December 2023 after the State Bank of Pakistan imposed curbs on opening fresh letters of credit (LCs) to discourage auto demand and control the current account deficit.

After the central bank relaxed import restrictions, CKD imports flourished to $50m in February, $60m in March, $72m in April, $78m in May, and $104m in June.

Some market experts believe that thriving CKD imports by the local assemblers were also due to the low localisation of parts in locally assembled vehicles, especially being rolled out by the new entrants under incentive packages offered in the 2026-2021 Auto Policy. Besides, the new models of old players also carry low volumes of locally made parts, thus nullifying assemblers’ tall claims of achieving the highest-ever localisation. Pakistan’s import bill of CKD kits had swelled to $1.67bn during FY22 from $1.119bn in FY21.

Mashood Ali Khan, an auto sector expert, said the rising trend in the arrival of CKD kits is largely driven by new entrants’ imports of parts rather than reliance on procuring locally made contents.

With the anticipated increase in US dollar value this year, he said assemblers had built up their inventories as a precautionary measure despite the market not expanding primarily due to low purchasing power and high interest rates.

Published in Dawn, July 26th, 2024