Car sales speed up 17 per cent

Pak Suzuki races away while Indus Motor slows down in March.

KARACHI:

Car sales sped up 17 per cent in March against the preceding month, led by Pak Suzuki Motor Company, the largest automobile manufacturer in the country, data shows.

Sales of Pak Suzuki Motor Company were boosted by the clearance given to its compressed natural gas (CNG) cylinder supplier.

The company has been given the green light to resume the use of CNG cylinders and all backlog orders for CNG vehicles are being met, said company spokesperson Shafiq Ahmad Shaikh.

The Oil and Gas Regulatory Authority had stopped CNG cylinder sales of Suzuki’s sole supplier in February following an incident in which one of the cylinders in a car blew up.

Pak Suzuki delivered CNG-fitted cars booked in January and February, which jumped  its sales, said Topline Securities analyst Furqan Punjani in a research note.

Suzuki Cultus sales sprinted more than three times to 1,435 units while Suzuki Alto sales almost doubled to 1,957 units.

Sales of Indus Motor, the maker of Daihatsu Coure and Toyota Corolla, were dented due to the rupee’s depreciation and high special excise duty, the analyst said.

The government last month increased special excise duty to 2.5 per cent from one per cent in a bid to increase tax revenue.

Corolla sales declined by nine per cent to 4,268 units compared with 4,698 units in February primarily due to buyers holding back due to the recent unveiling of the new model.

The new XLi and GLi variants will have new headlamps, sporty front grill and bumpers, along with redesigned tail lamps. The company this week increased the price up to Rs40,000 to adjust the increase in cost of local parts, according to a company statement.

Increasing prices may act as a bump to a significant growth in sales going forward, said an analyst.

It had been largely expected that the recent measures taken by the government to ease the age limit for car imports will hurt sales, however, auto sales continued to improve on the back of high farm incomes amid increase in agricultural commodity prices, said InvestCap analyst Abdul Azeem.

Age limit for used car imports was increased to five years from three years, a move thought to be a setback for the local auto assemblers.

Although sales are improving, shrinking gross margins mainly due to rising yen against the rupee would remain a key concern for the assemblers’ profitability, warned Punjani.

Additionally, the recent earthquakes in Japan are likely to result in production disruption for local assemblers.

Annual trend

Car sales improved 13 per cent in the first nine months of fiscal 2011 mainly due to robust growth in agricultural income coupled with significant improvement in remittances.

Sales stood at 97,804 units for July 2010 to March 2011 against 86,483 units sold in the same period of the preceding year, according to data released by the Pakistan Automotive Manufacturers Association.

Heavy-duty vehicles

Tractor sales dipped by two per cent to 50,551 units in the first nine months of fiscal 2011 compared with 51,472 in the same period a year ago.

Imposition of general sales tax on tractor sales would likely reduce sales in the coming months, however, higher agricultural income would compensate for it to some extent, according to analysts.

Published in The Express Tribune, April 13^th,  2011.