Stagnant incomes, declining agricultural growth caused slump.
Pakistan’s bike production drops for first time since 2000. 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.
More From FactFile: Apple cuts production of iPhone 14 Plus
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.
