Slowing economy drags auto sales down by 8% in FY19

Decline comes on back of rupee depreciation, hike in interest rate

KARACHI: Pakistan’s auto sector recorded a slowdown in FY19 as its sales dropped 8% to 237,950 units on the back of depreciation of the rupee and other economic developments.

Restriction on non-filers of tax returns in first half of the previous fiscal year, surge in interest rate and multiple price hikes also contributed to the decline in sales, stated Shajar Research in its report.

Sales of the auto sector declined after a gap of six years due to multiple factors mainly the restriction on non-filers from purchase of new cars, a significant hike in auto prices due to rupee depreciation and economic slowdown, said Topline Securities’ analyst Hammad Akram.

According to data released by the Pakistan Auto Manufacturers Association (PAMA), sales of the passenger cars segment dropped 2% to 191,344 units in FY19. It was mainly due to the rise in prices of different vehicles.

Sales of vehicles having 800cc to 1,000cc engine capacity dipped 24% to 35,008 units while sales of cars above 1,300cc increased 2% to 100,959 units, according to Shajar Research.



A marked decline was also seen in the sales volume of LCVs and SUVs in fiscal year 2018-19.

In terms of companies, Honda Atlas Cars dragged the industry lower as its sales were down 14% to 44,234 units from 51,494 units - the highest among its competitors. Sales of City and Civic fell 8% year-on-year to 39,189 units. BR-V sales were down a massive 42% to 5,045 units.

Pak Suzuki Motor Company also took a hit as its sales plunged 11% to 128,317 units. The decline was led by Mehran, whose sales went down 31% as its production was stopped in March 2019. The model was replaced by a new Alto 660cc variant.

Sales of Bolan and Ravi variants also declined 19% and 15% to 17,628 units and 18,281 units respectively. However, two variants of the company - Wagon-R and Cultus - outperformed as their sales recorded year-on-year growth of 12% and 11% respectively.

Interestingly, Indus Motor Company recorded a growth of 4% in sales to 65,399 units in FY19. The increase in sales was led by the company’s Corolla variant, which recorded growth of 10% to 56,720 units. On the other hand, year-on-year sales of Fortuner and Hilux declined 38% and 19%, respectively.

Published in The Express Tribune, July 12^th, 2019.

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