Pakistan has witnessed a second major drop of 18% in car sales to 22,370 units in April 2022, as the much awaited impact of restrictions imposed on car financing in September and increase in rate of taxes on imports in January to limit the sales came into play.
The government discouraged customers from buying cars in an attempt to avoid depletion in foreign exchange reserves, as the country assembles vehicles through imports.
Besides, a huge appreciation in the US dollar against the rupee made the imports more expensive and encouraged car makers to increase prices. This also caused a drop in the sales.
Earlier, the previous month of March witnessed the second highest monthly sales at 27,131 units, according to local research houses who cited Pakistan Automotive Manufacturers Association’s (PAMA) data on Thursday.
Ismail Iqbal Securities’ Analyst Muqeet Naeed recalled that the first major drop of 25% in sales was seen in January 2022, since the government took restrictive measures.
“That (25% drop) was due to higher sales in December 2021, in anticipation of an increase in taxes (in January 2022).”
Earlier, the country saw record-high monthly sales before the restrictive measures were imposed.
The decline in April is primarily led by below 1,000cc car segments, where Alto sales almost halved to 5,009 units; however, the impact was partially offset due to growth in 1,000cc car segments, as Cultus sales increased almost five-time to 1,745 units.
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Pak Suzuki Motors also commenced the delivery of the next generation Swift model and posted 2,273 units sales during the month, “barring that the 1,300cc car segment would have declined by 25% month-on-month”, he said.
Topline Securities analyst Sunny Kumar said Honda Atlas car recorded steepest decline of 28% month-on-month to 2,629 units in April 2022, led by a decline in sales of City and Civic by 31% month-on-month.
Similarly, Indus Motors also posted a decline of 18% month-on-month due to a decline in sales of Corolla and Yaris by 24% month-on-month.
Pak Suzuki sales were down by 16% month-on-month to 12,639 units in April 2022. All variants of the company reported a decline on a monthly basis except Swift due to the launch of a new variant and Cultus owing to ease of production issues, he said.
Hyundai Nishat sales were only down by 1% month-on-month to 1,287 units in April 2022, primarily due to an increase in sales of Porter (+63%) and Sonata (+17%), he added.
Arif Habib Limited’s analyst Mahe Rukh Fatima said in a commentary that auto sales plummeted by 18% month-on-month to 22,370 units, in the wake of “increase in car prices and rise in cost of financing (to end customers)”.
Albeit, the momentum remained positive in April compared to the same month of the previous year, as the sales surged 30% year-on-year, mainly on the back of resumption of pre-Covid-level economic activities along with the “launch of new models (Swift, Civic, City)”.
The sales remained high in the month under review on a yearly basis, as many new customers jumped to buy cars before the anticipated price hike – given the companies kept on hinting massive surge in cost of production and substantial rupee depreciation.
Published in The Express Tribune, May 13th, 2022.
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