Car sales grow 59% in September

Vehicle demand rises due to lower financing cost

KARACHI:

Automobile sales registered a sizable growth of 59% and amounted to 22,235 units in September 2021 owing to a low base effect and reduced cost of car financing.

According to data released by the Pakistan Automotive Manufacturers Association (PAMA) on Tuesday, car sales had been calculated at 13,982 units in the same month of last year.

“Pakistan’s total car sales in September 2021 (including Kia) came in at 25,000 units,” said Topline Securities analyst Usman Naseer in a report.

A report of Arif Habib Limited stated that automobile sales climbed 59% despite shortage of semi-conductors in international markets and suspension of booking of various types of automobiles.

The massive growth in sales volume could be attributed to higher demand for vehicles on the back of government’s support and relief measures and across-the-board reduction in federal excise duty on vehicles, the research house said.

It added that the reduction in sales tax on cars having engine capacity of less than 1,000cc resulted in lower vehicle prices and a higher sales volume.

A rapid pace of economic growth combined with lower rates of car financing fuelled the growth in automobile sales, the report said.

Company-wise, Pak Suzuki Motor Company recorded the highest growth in monthly sales at 72% in September 2021 as it sold 11,188 units. The firm had managed to sell 6,491 units in the same month of last year.

“In the 1,000cc category, volumes are significantly up by 143% year-on-year owing to a massive surge in sales of Suzuki Cultus,” said the AHL report.

During the month under review, sales of Indus Motor Company climbed 44% to 6,292 units against 4,365 units in the same period of last year.

Bookings of Honda Atlas Cars rose from 2,710 units in September 2020 to 3,635 units in September 2021, a surge of 34%.

Hyundai Nishat Motor’s sales skyrocketed 205% and reached 964 units last month as opposed to 316 units in September 2020.

Quarterly numbers

Car sales soared 84% year-on-year to 68,888 units during the quarter ended September 30, 2021. Pama data revealed that automobile bookings had stood at 37,383 units during July-September last year.

In comments to The Express Tribune, Topline Securities analyst Usman Naseer said that the primary reason behind the rise was a low base effect during the first quarter of previous fiscal year.

“People booked lower number of cars in the corresponding period of last year due to Covid-induced slowdown coupled with restrictions on businesses including carmakers,” he said. “In addition, the State Bank of Pakistan reduced interest rate to 7%, which turned car financing affordable and people were motivated to book vehicles.”

An improvement in macroeconomic activity and reduction in car prices after the announcement of budget in June 2021 also fuelled the market’s advance.

Published in The Express Tribune, October 13^th, 2021.

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