No respite: Falling auto sales drag industry down

Published: October 12, 2019
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PHOTO: FILE

PHOTO: FILE

KARACHI: There was no respite for the auto sector as the monthly sales data once again presented a dismal and deteriorating image of the industry.

Car sales recorded a decline of 39% to 11,724 units in September 2019 from 19,345 units in the same month of previous year, according to data released by the Pakistan Automotive Manufacturers Association (Pama).

The consistent dip came on the back of high car prices following massive rupee devaluation.

High-interest rates for auto financing and an overall slowdown in the economy, which adversely impacted the disposable income, were also among the reasons for the plunge, said Topline Securities’ analyst Hammad Akram.

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Sales dropped 41% in the first quarter of the ongoing financial year to 34,308 units compared to 58,351 units in the corresponding period of previous year. However, there was a 16% improvement in September 2019 compared to the previous month.

The situation remained critical for all the three major market players with some cutting production days to cope with the increasing cost.

Honda Atlas Cars remained the major laggard, with a 68% plunge in sales year-on-year to 1,446 units in September 2019. The downtrend was led by 66% year-on-year dip in sales of City and Civic variants due to a significant jump in their prices.

On the other hand, BR-V also continued to underperform as its sales fell 82% year-on-year.

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Indus Motor Company fared no better and witnessed a plunge of 57% in sales to 2,121 units in September 2019.

“The significant drop in volumes is mainly due to a 59% year-on-year decline in sales of its Corolla variant, which historically has supported Indus Motor’s overall volumes and has been the consumers’ preferred choice in the sedan category,” Akram added.

Similarly, sales of Fortuner and Hilux variants declined 43% and 32% year-on-year respectively.

Sales of Pak Suzuki Motor Company were down 18% year-on-year to 8,157 units. “The decline in sales was led by Wagon-R, whose sales fell 74% year-on-year mainly due a shift in customers’ interest towards Alto and recently launched Picanto by Kia Lucky Motors.”

Alto recorded sales of 4,924 units in September, which were the highest monthly sales since its launch.

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“Although Pak Suzuki has recently raised Alto prices by Rs70,000 to Rs85,000, being an entry segment car we believe it to perform well in upcoming months as well,” the analyst added.
Published in The Express Tribune, October 12th, 2019.

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