Fiscal 2011 review: Car sales fight the tide, rise 3.2%

Higher purchasing power by agricultralists does the trick.

KARACHI:

Car sales managed to crawl up despite natural calamities making the ride bumpy in the outgoing financial year.

Sales rose 3.2 per cent to stand at 127,944 units in the fiscal 2011 (July 2010 to June 2011) against 123,957 units sold in the preceding year, according to data released by Pakistan Automotive Manufacturers Association on Monday.

The recovery in sales primarily stems from improved rural economy which has benefited from increased farm income, said Topline Securities analyst Furqan Punjani.

Automobile makers witnessed a slow down in production due to supply disruptions following the Japanese earthquake, said Punjani.

The financial year 2011 started off on a low note as sales were slow in the first two months due to the local floods.

Sales in the urban centres remain subdued throughout the year as elevated interest rates lowered the appetite for consumer financing, added Punjani.

Volumetric sales are down 18 per cent from their historic high of 177,750 units registered in fiscal 2008.

Monthly sales at two-year low

Sales dropped to a two-year low in June as the sector became uncertain following the measures taken in the budget.

The budget, announced on June 3, removed special excise duty and decreased GST on car sales to 16% from 17%. This will lead to cars prices falling approximately 2 to 3 per cent and improving sales, said Punjani.

Sales depicted a significant decline of 43 per cent on a monthly basis to 7,517 units. Suzuki sales dropped 68 per cent followed by 33 per cent IN Indus Motor.

“June sales are not an actual depiction of the sector’s fundamental and they are expected to revert back to normality from July and likely to show an overall increase of seven per cent in FY12,” said Punjani.

Heavy-duty vehicles

Tractor sales dipped by three per cent to 69,203 units in fiscal 2011 compared with 71,512 in the same period a year ago.

Imposition of general sales tax on tractor is likely to keep the declining trend running in the coming months.

Automobile industry highlights

The only major change in the budget 2010 was the government waiving 15% customs duty on the import of LPG buses to encourage use of cheaper fuel.

The government enhanced the age limit for import of used cars from three to five years under special schemes in an attempt to break the monopoly of local car manufacturers.

Business groups of Pakistan and India completed initial talks to bring Tata Nano, the world’s cheapest car, to Pakistan. An initial investment of $10 million will assemble the low-priced Nano in Pakistan.

The government increased special excise duty to 2.5 per cent from one per cent in a bid to increase tax revenue Indus Motor Company unveiled the new 2011 Corolla Altis and GLi automatic variants. The new variants offer new headlamps, sporty front grill and bumpers, along with redesigned tail lamps.

Published in The Express Tribune, July 12^th, 2011.