Are increasingly robust car sales a sign that the economy is picking up? Despite falling inflation and rising forex reserves, the opinion of the common man does not reflect the kind of change the government wants in the opinion on the street. Political stabilization has been followed by economic stabilization, but still there is none of the hoped-for pickup in economic activity. While agriculture continues to be the mainstay of the economy, there are two reasons why efforts to push it may not work. The first is that Pakistan comprises some of the oldest cultivated areas of the world, and thus it may not be possible to extract much more out of soil that has been farmed so long. Secondly, but perhaps no lo less important, productivity has increased since the Green Revolution of the 1960s, but the wheat and sugar autarky achieved in the 1980s can be seen slipping away as sugar is being imported in the wake of a shortage which sees its retail price reach Rs 190 per kg.
Has the pick-up in car sales seen a reflection in a pick-up in largescale manufacturing? In principle it should, but the best that can be said is that caremakers have not announced any further closures or suspensions. Another problem to surface is that while car sales have improved across all segments, there has been a decline in tractors sales, which means future problems in agriculture. One reason for strong sales in June to end the fiscal year was the desire of many buyers to have their car registered in the last fiscal year. This was done so that any new taxes could be avoided, as they would only apply after July 1, particularly the sales tax, which was expected to increase massively. However, this was balanced by competition in the sector, as new brands entered the market, and older brands brought in new models. All in the midst of increasingly cutthroat marketing.
Increased car manufacturing has not yet reflected the new units with Chinese partnership for the manufacture of electric vehicles. That is likely to result in large sales and vehicle-replacements if Pakistan wants to meet the target of 30 percent EVs by 2030. The government needs to work closely with oil-fuelled vehicles, and if possible help them convert at least partially to EVs.
