Business

Car sales plunge 56% in October

Expensive vehicles, higher interest rates for auto financing restrict demand

Our Correspondent November 13, 2019

PHOTO: REUTERS

KARACHI: The condition of the automobile sector continued to worsen in Pakistan as car sales plunged 56% on a year-on-year basis, posting the largest decline since March 2009 mainly due to high prices following massive rupee depreciation and higher interest rates for auto financing.

According to data released by the Pakistan Automotive Manufacturers Association (Pama), auto sales were recorded at 10,853 units in October 2019 compared to 24,850 units in the same month of the previous year.

“The decline is primarily attributable to the recent government drive to document the economy, higher automobile prices post-rupee devaluation, higher interest rates for auto financing and overall economic slowdown,” said Topline Securities’ analyst Hammad Akram.

The situation remained dismal for all the three major market players as they posted a significant year-on-year decline in sales.

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Honda Atlas Cars remained the major laggard with a 72% year-on-year drop in sales to 1,384 units in October 2019, its highest monthly decline in 7.5 years.

“Sales of City and Civic variants fell 77% year-on-year amid a significant increase in their prices while BR-V sales declined 33%,” the analyst said.

Indus Motor Company fared no better and recorded a drop of 61% in sales to 2,496 units in October 2019.

Sales of Pak Suzuki Motor Company were down 48% year-on-year to 6,973 units, posting the largest decline in over seven years.

“The decline in sales was led by Wagon-R and Cultus, whose sales were down 84% and 51% respectively, due to a recent shift in customer interest towards Alto and newly launched Picanto by Kia-Lucky Motors,” the analyst added.

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In the first four months of the current fiscal year, auto sales fell 46% to 45,161 units against 83,201 units in the same period of the previous fiscal year.

On a month-on-month basis, Indus Motor surprisingly reported an increase of 18% in volumetric sales.

“This is mainly due to 10% and 86% month-on-month increase in Corolla and Hilux sales respectively,” Akram said. “We believe this has occurred due to different waiver schemes offered by the company in collaboration with commercial banks.”

On the other hand, Pak Suzuki Motor faced the largest month-on-month decline in car sales of 15%, followed by Honda Atlas, which reported a fall of 4% in sales.

Published in The Express Tribune, November 13^th, 2019.

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COMMENTS (1)

abcd | 4 years ago | Reply I want to change my car...but i cannot afford to buy a new one as the prices have skyrocketed. Here is an advice to the car manufacturers....please reduce prices by 50% by giving people some discount from your profits. At a time the entire nation is trying to make ends meet, it would be nice to see the car manufacturers also meeting their fixed costs and keeping their sales running. Isn't it odd that while prices were increased quickly after USD-PKR exchange rate increase, there has been no price reduction with the reduction in USD rates. Also the price of plastic raw material is declining internationally but the car manufacturers (with major components made of plastics) is not passing on any benefits to the consumers. All we see is PAMA reporting reduction in sales, car companies announcing off days and everyone crying about govt taxes....but nobody wants to reduce their profits. Food for thought.

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