CKD Kit Imports Surge to $779M in FY24 After Relaxed Restrictions
CKD Kit Imports Surge to $779M in FY24 After Relaxed Restrictions

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

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

Following the relaxation of these import restrictions by the central bank, CKD imports flourished, rising to $50 million in February, $60 million in March, $72 million in April, $78 million in May, and $104 million in June.

Some market experts believe that the increase in CKD imports by local assemblers is due to the low localization of parts in locally assembled vehicles, especially those produced by new entrants under incentive packages offered in the 2016-2021 Auto Policy. Additionally, new models from established players also carry low volumes of locally made parts, contradicting assemblers’ claims of achieving high levels of localization. Pakistan’s import bill for CKD kits swelled to $1.67 billion in FY22 from $1.119 billion in FY21.

Mashood Ali Khan, an auto sector expert, stated that the rising trend in CKD kit arrivals is largely driven by new entrants’ imports of parts rather than reliance on locally made components.

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

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