Car sales: Down in December

KARACHI: Car sales dropped for a second month in a row during December as customers seem to have held off purchases on hopes of better deals.

Data released by the Pakistan Automotive Manufacturers Association (Pama) on Monday shows that 7,446 cars were sold by local assemblers during the last month of 2010, compared with sales of 10,259 units in the preceding month.

Similarly, the production of cars was also scaled back from 10,500 units in November to 8,571 units in December.

However, cumulative car sales increased by about 11 per cent in the first half of fiscal 2011 (July-December), compared with the second half of fiscal 2010 (January-June). Likewise, sales during the last month of the year also witnessed a year-on-year increase of about five per cent.

“In December, customers usually hold back on the purchase of cars,” explained auto sector analyst Abdul Azeem. “Most people prefer to buy in the new year so that they can avail newer models and also have the car registered in the new year.”

The analyst highlighted that Indus Motor recently announced a reduction in prices of its range of cars. “They have installed a press shop in the country which has lowered their dependency on imports.”

Azeem explained that since Indus will now have to import fewer parts from Japan, the impact of foreign exchange rate fluctuations on the local price of their cars will reduce.

He said that Suzuki may soon follow suit with a reduction in prices of its models but predicted: “Honda may find it difficult to cut prices given their level of dependence on the yen and the continuing deterioration of the local currency against it.”

Sales of trucks and buses fell almost nine per cent in the first half of the current fiscal. During December, 267 trucks and buses were sold, taking the tally for the six-month period to 1,627 units.

During the first half of fiscal 2011, 388,215 motorcycles and three-wheelers were purchased across the country. Of the total, 68,117 units were sold in December.

Sector analysts had predicted weaker sales for the automobile sector, predominantly due to lower car sales. The recent move by the government to ease import restrictions was expected to chew away sales of local assemblers but now that the scheme has been put on the back burner, analysts expect sales to pick up over coming months.

Published in The Express Tribune, January 11^th, 2011.