A Long Road to a Faster Lane? Zeenat Chaudhary on how the automotive industry will fare in these uncertain times. Ever since Karl Benz invented the world’s first motor car in 1886 – the Benz Patent-Motorwagen – the automotive industry has come a long way. From hi-tech Hondas and Chryslers to electric Teslas and Nios, the global industry contributes roughly three percent to all GDP output. Due to the pandemic, however, worldwide car sales have taken a hit and are expected to fall from $74.9 million in 2019 to under $62 million in 2020, according to Statista. Industry Overview In Pakistan, the automotive industry, which contributes 2.8% to the country’s GDP (source: Invest Pakistan), has faced a cycle of booms and busts since the 2000s. In fact, the auto industry was on a downward trend before Covid-19 struck, primarily due to rising taxes (Federal Excise Duty increased from 2.5% to 7.5% and Additional Customs Duty by seven percent) and the rupee’s depreciation against the dollar. As a result, according to the Pakistan Automotive Manufacturers Association (PAMA), total passenger car sales (for Honda, Suzuki and Toyota) declined by four percent from 216,786 in FY 2017-2018 to 207,630 in FY 2018-2019. After Covid-19 struck, auto manufactures had to close operations for three months and sales further dropped to 96,455 (a decrease of 53.5%) in FY 2019-2020 (Toyota Corollas had the most sales, followed by Honda Citys/Civics and Suzuki Swifts), with April 2020 showing no sales. At the same time, the import of cars and spare parts declined to 12% compared to 15% and 27% in 2019 and 2018, respectively.