Car sales surge by 51% in H1FY2025

Industry sees slight recovery boosted by remittances, lower interest rates; farm tractors see decline

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KARACHI:

Passenger car sales rose by 51.3% to 46,398 units during the first six months of the current fiscal year (H1FY2025) compared to the same period last year, driven by skyrocketing remittances, falling interest rates, and the arrival of a new year, which boosted the confidence of local buyers.

The car sales figures also reported a slight month-on-month decrease. However, the cumulative total during the period indicates positive signs for the struggling automotive industry of the country.

According to the Pakistan Automotive Manufacturers Association (PAMA), sales of trucks and buses rose by 89.1% to 1,494 units and by 76.7% to 304 units, respectively. Sales of jeeps and pickups increased by 61.2% to 14,174 units. Meanwhile, sales of two- and three-wheelers (motorbikes and rickshaws) surged by 28.5% to 696,455 units.

The farm tractor industry, however, remains a concern as it is still in decline showing tractor sales falling by 25.7% to 17,397 units during the period, largely due to economic challenges faced by small growers and the impact of climate change. Notably, the lacklustre sales of tractors persisted during the first five months of the fiscal year (July 2024 to November 2024).

Interestingly, for the first time after the first five months of the current fiscal year, tractor sales in December 2024 gained momentum, shooting up to 7,030 units. This improvement was attributed to the corporate sector, with a few local and international companies entering the agriculture sector to enhance exports of agricultural produce.

Commenting on the vehicle sales, Auto Sector Analyst Mashood Khan told The Express Tribune that the car sales data released by PAMA indicates slight growth in the four-wheeler market. This growth can be attributed to several factors, including a gradual fall in the interest rate to 13% from a record high of 22% and a significant inflow of workers' remittances, which reached $3.1 billion in December 2024. Families receiving substantial foreign currency from relatives abroad were likely to invest in new car purchases.

A couple of Chinese four-wheeler brands are gaining popularity in the local market, offering brand new vehicles with more features at a lower cost compared to established foreign brands.

"We may predict now that 2025 will be far better than 2023 and 2024 in terms of vehicle sales. However, while our benchmark for annual vehicle sales generally prevails around 250,000 units, we may not reach it but we will come close to it," Khan said.

In the two-wheeler market (motorcycles), Japanese brands of fuel-driven bikes remain on the rise, supported prominently by middle-class families. While more than three dozen Chinese brands of electric motorbikes have entered the local market, Japanese brands have maintained their dominant position.

Highlighting industry challenges, Khan said that the market for trucks and buses is unlikely to achieve significant breakthroughs in the next six months. Additionally, while 2023 and 2024 were better years for the tractor industry, a full recovery will take time.