The local automobile Industry has been witnessing its own recession mainly due to the conclusion of the Punjab government’s yellow cab scheme. The government had allocated Rs4.5 billion in fiscal 2012 for the provision of 20,000 yellow cabs to the youth of the province.
The used cars are challenging the local automakers in both price and quality and continue to attract customers’ attention hurting local sales, according to Zoya Ahmed, analyst at BMA Capital.
The share of imported cars increased phenomenally as more than 55,000 cars were imported during the last fiscal year. The final blow to the industry was given by the discontinuation of the Alto and Cuore in shifting interest of buyers towards imported cars.
Earlier, the federal board of revenue reduced the depreciation limit of cars to four years and has permitted the imports of five-year old used car as per past practice.
Pak Suzuki Motor Company (PSMC) – the country’s largest assembler – saw sales surge 9% month-on-month. Suzuki Cultus under the domain of 1000cc segment witnessed an increase of 3% year-on-year to 1,173 units. Biggest decline was seen in the sales of Suzuki Bolan which experienced 10% month-on-month fall to 862 units. Sales of Bolan and Mehran were lower due to higher base effect, as during the same period last year sales of these two were higher due to the yellow cab scheme. In addition to that, suspension of Alto’s and Cuore’s production – the hot cakes of the 1000cc segment– has also impacted the sales negatively as the company now relies heavily on its higher-end segment products, according to Sarfraz Abbasi, analyst at Summit Capital.
Sales of Indus Motor Company’s (IMC) Toyota Corolla – the highest selling car in the country – decreased 24% in August 2012 to 2,800 units from 3,681 units in August 2011.
Honda Atlas Cars Pakistan was the only car assembler which saw a massive decline of 25% month-on month to 1,241 units in August 2012 from 1,650 units in July 2012.
As far as the market share is concerned, PSMC leads with 57% followed by IMC and Honda Atlas Cars with 30% and 13% respectively in terms of August sales.
The month ahead
Local industry will face more pressure on the car sales going forward due to exorbitant prices and influx of second-hand imports. The players of the industry have demanded of the government to frame a stricter import policy.
Published in The Express Tribune, September 12th, 2012.
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I firmly believe that the policy of the Government should not be changed regarding the imports of used cars. The heavy lobbying of the big 3 automakers let them set prices of the cars so high that if a lay man working for a local company wants to buy a car, he wont be able to afford even the cheapest model. They say the inputs are very expensive now. Well that's applicable to every industry but the pricing for the cars here has seen some insane hikes. What is happening now is that small car dealers or small importers are pocketing money rather than the big fish. I think its fair enough. The industry had its time to make money...they did...The customers never had any value for their money. Why not let the lay man make a buck out of these imported cars.