KARACHI: Auto assemblers endured a drop of 15% in car sales in May 2018 on a month-on-month basis on the back of increase in vehicle prices and government’s restriction on non-filers of income tax returns that now cannot buy a new car.
According to data released by the Pakistan Automotive Manufacturers Association (Pama), total car sales including light commercial vehicles and 4×4 were recorded at 21,813 units, a 15% fall compared to the previous month.
However, when compared with sales in May 2017, the industry recorded a 5% growth in May this year. The positive development was driven by a remarkable performance by Indus Motor Company, which outperformed the market as sales of Corolla and Fortuner stayed strong.
According to Arif Habib Research’s analyst Arsalan Hanif, the slowdown in car sales was because of higher vehicle purchase costs as companies raised prices for the third time in FY18, attributing it to the rupee’s free-fall against the US dollar.
Moreover, government’s restriction on booking and registration of new cars by non-filers of tax returns also played its part after companies stopped vehicle booking by such customers.
Resumption of used car imports through transfer of residence, personal baggage and gift schemes also affected sales of locally produced cars.
Sales dropped 7% in the 1,300cc and above category on a month-on-month basis, but they were up 7% year-on-year to 8,865 units amid increase in demand for Toyota Corolla.
In the less-than-1,000cc category, Mehran sales plunged 23% month-on-month to 3,557 units whereas year-on-year they rose 5%.
Pak Suzuki Motor Company’s sales grew 5% year-on-year in May 2018 to 11,651 units, which was mainly driven by strong sales of brands like Swift, up 52% year-on-year, WagonR, up 40% and Ravi, up 12%.
Indus Motor recorded sales growth of 20% year-on-year in May 2018 to 5,910 units following strong demand for Corolla (4,676 units) and Fortuner (508 units). On a monthly basis, Toyota Hilux was the only car that posted a sales growth of 2% month-on-month as demand for it rose before general elections that were scheduled for July 25.
Sales of Honda Atlas Cars came in at 4,252 units, down 9% year-on-year mainly due to lower sales of Honda BRV. Furthermore, cumulative sales of Civic and City remained flat at around 3,750 units.
In 11 months of FY18, car sales grew 21% year-on-year to 240,114 units, propelled by rising auto financing, various cab schemes and improved macroeconomic indicators.
Tractor sales increased 19% year-on-year, but fell 15% month-on-month to 6,753 units in May 2018. Sales of Millat Tractors and Al Ghazi Tractors recorded a growth of 22% year-on-year and 13% year-on-year to 4,165 units and 2,505 units, respectively.
Share prices of all listed automobile manufacturers fell on Tuesday. Overall, the KSE 100-share Index recorded a hefty drop of 702 points, which was attributed to a negative economic outlook and rupee’s depreciation.
Since auto assemblers require import of around 30-50% completely knocked down (CKD) kits, their bottom line is sensitive to the rupee’s value against the US dollar and Japanese yen.
Published in The Express Tribune, June 13th, 2018.