Car sales drop 8% amid economic strain

Rising prices, consumer constraints drive decline

KARACHI:

Car sales dropped to 9,709 units, marking an 8% decline on a month-on-month basis due to factors such as rising car prices, expensive auto financing, and consumers’ low purchasing power, according to data reported by the Pakistan Automotive Manufacturers Association (PAMA), compiled and shared by Topline Securities on Tuesday.

Moreover, there was a significant 57% year-on-year increase in auto sales in February 2024.

Additionally, car sales for non-PAMA members totalled 10,900 units, reflecting a 7% decrease on a month-on-month basis, while sales rose by 52% year-on-year during February 2024.

Analysts and automakers stated that it would take ample time to bolster sales as the country’s economic conditions worsen, and buying new cars is perceived as a luxury. They noted that people are primarily focusing on essential items. They anticipated lacklustre auto sales during the first and second weeks of Ramazan but expected some momentum in the last week before Eidul Fitr.

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Indus Motors experienced a 26% month-on-month decline in auto sales, reaching 2,036 units in February 2024.

During the first eight months of fiscal year 2024 (July to February), car sales decreased by 41% to 59,699 units, as reported by PAMA, compared to the 101,426 units registered in 8MFY 2023.

“Some stability in auto sales is likely going forward! The International Monetary Fund (IMF)’s loan and falling rates will provide some support to sales,” commented Topline Securities CEO Mohammad Sohail.

Author and auto expert Murtaza Mandviwala remarked that it is challenging to forecast anything in the current situation. Despite the poor financial situation, automakers will continue to introduce new models and instalment plans in the local market. Furthermore, tractor sales decreased by 12% on a month-on-month basis but registered a 1% increase to 3,366 units year-on-year in February 2024.

Published in The Express Tribune, March 13^th, 2024.

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