Car sales decline 48% year-on-year in Jan 2020

Contrary to historical trends, month-on-month sales edge down 2%

KARACHI: The new year brought no happy tidings for Pakistan’s auto sector, as the industry continued to suffer from the impact of low sales.

Contrary to historical trends, car sales declined 2% in January 2020 to 11,787 units from 12,069 units in December 2019. Usually, car sales tend to rise on a month-on-month basis owing to the new year phenomenon. The last time car sales declined in January was in 2006.

However, according to a Topline Securities’ report, car sales jumped 87% month-on-month, excluding sales of Pak Suzuki Motor Company.

“The company had announced an increase in car prices mid-December 2019 to be effective from January 2020, resulting in pre-buying (up 49% month-on-month) in December 2019,” stated the report. On the contrary, year-on-year vehicle sales were down 48% in January 2020 from the 22,513 units sold in January 2019.

Car sales plunge 56% in October

The sluggish demand due to high lending rates for auto financing amid an overall slowdown in the economy remained the key reason hindering the growth of the sector. A constant rise in car prices due to high cost of production also deterred potential buyers.

The overall trend remained dismal as Pak Suzuki’s sales declined 53% to 5,555 units in January 2020 compared to 11,746 units in the same month of the previous year. Meanwhile, Indus Motor and Honda Atlas also recorded a dip in sales of 36% and 51% respectively.

On the other hand, month-on-month sales improved by a massive 120% for Honda Atlas as the company sold 2,210 units in January compared to 1,005 units in the previous month. Indus Motor registered an increase of 72% on a month-on-month basis to 4,022 units.

Car sales were down 45% to 78,806 units in 7MFY20 from 142,579 units in the same period of the previous year due to high vehicle prices and high interest rates. “Sales of motorcycles by Atlas Honda increased by 12% month-on-month to 95,000 units, while on a year-on-year basis sales remained largely similar,” the report added. “We believe car sales to have largely bottomed out in December 2019, with major impetus likely to be seen from the start of FY21.”

Published in The Express Tribune, February 12^th, 2020.

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