Auto sales plummet to 33-month low
PHOTO: file
Pakistan’s auto industry is experiencing a considerable downturn as sales plunged to a 33-month low, raising serious concern among industry professionals and investors, who fear that this trend can lead to prolonged plant closures and widespread unemployment.
Auto sales, in the categories of cars, light commercial vehicles, vans and jeeps, decreased by 73% year-on-year (YoY) and 47% month-on-month (MoM) to 5,800 units in February 2023, according to the Pakistan Automotive Manufacturers Association (Pama).
“It is the lowest monthly sales number since May 2020 when sales stood at 4,500 units,” said Arif Habib Limited Head of Research Tahir Abbas.
Car sales, including sales of non-Pama members, came in at 6,400 units, down 47% MoM, the lowest sales since May 2020 due to unavailability of completely knocked down (CKD) parts amid Letters of Credit (LC) issues, which led to non-production days. On YoY basis, car sales went down by 73%, according to Topline Research analyst Sunny Kumar.
Auto sales dropped due to supply constraints, which forced manufacturers to close their plants, said Insight Securities’ auto sector analyst Asad Ali.
In first eight months (Jul-Feb) of financial year 2022-23, weak demand dynamics were evident from a 43% YoY fall in industry sales, Kumar said, adding that it was primarily attributable to escalating car prices, expensive auto financing and low purchasing power of consumers.
Pak Suzuki Motor Company registered a decline of 67% MoM and 92% YoY and its sales reached 978 units, he said.
Indus Motor reported a decline of 49% MoM to 1,803 units, followed by Honda Atlas Cars where sales dropped by 39% MoM and 40% YoY to 1,636 units in February 2023.
However, Hyundai sales went up by 11% MoM where Tuscon sales were up by 14% MoM to 708 units and Elantra sales jumped by 40% MoM to 243 units in February 2023.
“The whole economy in general and the auto sector in particular are doomed due to the government’s restriction on import of raw material and parts,” commented Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) former chairman Abdul Rehman Aizaz.
Tractor and motorcycle segments would take another plunge from April, Aizaz projected, adding that the industry could recover to 40% of the volumes seen in 2021-22, if imports were allowed.
“With massive devaluation and additional taxes, 60% of the market has evaporated. It will take at least three years to achieve the volume of 300,000 cars again.”
Amongst tractor makers, Millat Tractors recorded 18% MoM increase in sales that reached 2,602 units in February 2023, while Al-Ghazi Tractors posted 39% MoM decline to 728 units.
This took total tractor industry sales to 18,249 units in first eight months of FY23, down 49% YoY due to floods, plants shutdown, lower purchasing power of consumers and higher prices.
Published in The Express Tribune, March 14th, 2023.
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