2021 - a historic year for new car models
auto financing PHOTO: FILE
Pakistan’s auto sector is on a path of handsome recovery as it will launch the largest number of new cars in a year in 2021.
“It is for the first time in the history of Pakistan that more than 15 new cars are being launched across the country in a single year,” said Arif Habib Limited analyst Arsalan Hanif in comments to The Express Tribune on Tuesday. “We expect the auto sector to outperform this year for a few reasons.”
Listing the new cars launched in January 2021, the research house stated that United Motors unveiled Alpha, Toyota introduced Corolla X, Changan started taking orders for Alsvin and Proton presented X70.
In addition, new models were launched in February as well which included ZS by Morris Garages (MG), Sorento by Kia Lucky and Saga by Proton, it said.
According to the research house, new cars expected to be unveiled in March are Corolla Cross by Toyota, Elentra by Hyundai Nishat and X25 by BAIC. “April may see the unveiling of Swift by Pak Suzuki and electric vehicle ZS by MG,” it said.
Although the number of new cars expected to be introduced in the local market this year was around 20, uncertainty loomed over the launch of a few models, said Hanif.
“When the discount rate is low, automobile financing grows at a faster pace and as a result, the sector witnesses a surge in sales,” he said.
In the past six months, auto financing soared from Rs211 billion to Rs262 billion, a jump of Rs51 billion. According to him, relatively low interest rates play a great role in raising the number.
“If the discount rate stays stable or declines, the auto sector will see a further growth in sales,” he said. “When the economy is in a growth phase, consumer spending increases automatically, which benefits the auto sector.”
In 2018, 78,000-80,000 used cars were imported, however, this number plunged to only 10,000 cars in 2020.
The policy against used car imports has created a huge gap and new car assemblers such as Lucky Kia Motors and Hyundai Nishat will take benefit of this gap.
“This policy is also good for the local automobile parts’ manufacturers,” Hanif said.
New companies, which were entering the country, would have to buy auto parts from local manufacturers, which would enhance auto parts manufacturing in Pakistan, he said.
“We see this year as one of the best for the auto sector,” remarked Hanif. “Old players will witness a robust growth while new players will be in the limelight with the launch of new car models.”
New companies have forced the old original equipment manufacturers (OEMs) to introduce fresh models with better features, higher fuel efficiency, improved safety standards, comfort and performance, said Topline Research analyst Fawad Basir.
“The automobile sector is growing as a whole and we expect car sales to touch 200,000 in 2020,” he said. “At a high point, this number was 330,000 units, therefore, there is still plenty of room for the auto industry to grow as macros improve.”
Published in The Express Tribune, February 24th, 2021.
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