PERHAPS, living in the city surrounded by Hilux and Civics, it is easy to forget that Karachi, Lahore and Islamabad are not entirely representative of the masses. Just 20 people out of 1,000 have a car in Pakistan.

The main reason is affordability.

Only 6pc of Pakistani households can afford avehicle, and if the household size is more than six, the vehicle ownership rate falls to less than 1pc.

Even a 660cc car like Alto costs upwards of Rs2.2 million. Assuming an average household income of Rs40,000, it would take five years for a family to afford a basic car, assuming they have no other essential expenses such as food, transport or schooling.

Feudal economics play a role in car ownership. When the crops do well, the small farmers buy two-wheelers, and the feudal lords purchase Fortuners. According to Optimus Capital Management report, a good cotton harvest complimented by a high support price (Rs8,500 per maund) will help improve agriculture income, which will translate into higher demand for the auto sector.

However, in the current economicclimate of sky-high prices and eroding income with surging prices of four-wheelers, the number of households able to afford a car is steeply declining. Fuel prices and shoestring budgets push those who would have bought affordable cars towards bikes.

As an industry, the auto sector is vital, accounting for roughly 4pc of the GDP, 15pc of the large-scale manufacturing, and employing nearly two million people.

Despite the small segment of society that can afford cars, Pakistan spends billions on infrastructure that enables private cars, not to mention the import of oil used to fuel cars.

Even with low vehicle ownership, major urban areas are choked. If thousands more households were to be able to afford cars, where would they drive or park? The auto sector is entirely dependent on domestic demand, which is limited. The country cannot absorb tens of thousands of additional cars.

For the auto sector to flourish and operate on higher economies of scale with imrprove efficiency, it must become export competitive rather than a subsidised industry perpetually in its infancy. •