Islamabad, JULY26: Due to shifts in sales and factory closures, unrestricted imports starting in February raised the arrival of completely knocked down (CKD) kits to $779 million in FY24 from $750 million in FY23.
In an effort to reduce auto demand and manage the current account deficit, the State Bank of Pakistan placed restrictions on the opening of new letters of credit (LCs), which caused CKD imports to drop precipitously from $104 million in December 2023 to $37 million in January. CKD imports increased to $50 million in February, $60 million in March, $72 million in April, $78 million in May, and $104 million in June after the central bank loosened import restrictions.
Some industry analysts surmise that the local assemblers’ successful CKD imports can also be attributed to the poor localization of parts in locally manufactured vehicles, particularly those introduced by new entrants with incentive packages included in the 2026–2021 Auto Policy. Moreover, the new models of established players also contain small amounts of locally produced parts, disproving the lofty claims of assemblers that they have achieved the highest level of localization ever. Pakistan’s CKD kit import bill increased from $1.119 billion in FY21 to $1.67 billion in FY22.
Expert in the auto industry Mashood Ali Khan stated that new competitors’ importation of parts, as opposed to their reliance on obtaining locally produced contents, are the main cause of the increasing trend in the introduction of CKD kits. He stated that even if the market hasn’t expanded because of poor purchasing power and high lending rates, assemblers have increased their inventory as a preventative measure due to the projected increase in the value of the US dollar this year.
