Changing Dynamics of Profitability in Automobile Sector of Pakistan

Abstract

The basic motive of this study is to explore the changing dynamics of profitability in Pakistan’s Automobile sector. For this purpose changing dynamics is measured by different variables i-e: Advertising, Exchange rate, Interest rate, Inflation and custom duty. Profitability is measured by two proxies ROA and ROE. We have used ANOVA in STATA 15 to empirically examine the results. Panel data has been used. Three main companies of automobile sector of Pakistan have been selected for this purpose. Results reveal that Advertising, Exchange rate and inflation has a significant (positive /negative) impact on ROA whereas interest has an insignificant impact on ROA. In case of ROE Advertising, Exchange rate and Interest has a significant (positive/negative) impact on ROE whereas Inflation has an insignificant impact on ROE. No impact on profitability was seen because of constant rate of Custom duty.