Despite robust demand in second half, car sales fall 24% in FY13

A mix of good and bad news affected performance of auto industry in the year.

Farhan Zaheer July 10, 2013
Importers say used car imports have slowed down significantly since December 2012 and imports may have fallen at least 30% to 40% by the end of FY13 in June. PHOTO: FILE

KARACHI: Sales of locally assembled cars dropped a considerable 24% to 135,310 units in fiscal year 2012-13 compared to 179,139 units in the previous year.

FY13 brought a mix of good and bad news for the automobile industry. Its biggest success came in December 2012 when the government bowed and accepted a key demand by reducing the age limit for import of used cars from five years to three years.

This provided substantial relief and eased the pressure on the auto industry, leading to a significant decline in import of used vehicles into the country.

In a report issued on Wednesday, Topline Securities said car sales rose 35% to 77,773 units in the second half of FY13 compared to 57,540 units in the first half following restrictions on import of used cars and improvement in auto financing.

Importers say used car imports have slowed down significantly since December 2012 and imports may have fallen at least 30% to 40% by the end of FY13 in June.

Earlier, used car imports had increased gradually over the past few years and peaked in FY12 when the country imported 55,000 cars.

Other noticeable factors that influenced the demand for vehicles during the year included discontinuing production of Suzuki Alto and Daihatsu Coure, continuous ban on compressed natural gas (CNG) kits in new cars and end of the Punjab taxi scheme that had added 20,000 units to overall car sales in FY12.

Both Pak Suzuki Motor Company and Indus Motor Company – the makers of Daihatsu Coure – failed to replace their economy cars with new ones and hence used economy cars continued to attract the attention of buyers in the market.

“Apart from other reasons for the decline in car sales, we believe lower farmer income has also contributed to the weak demand,” Shajar Research said in a report.

According to company-wise figures, Pak Suzuki Motor Company – the biggest company in terms of sales and production – sold 75,637 units in FY13, lower by 33% from 112,157 units sold in FY12. The end of Punjab taxi scheme in the first quarter of FY13 hurt overall sales of the company during the year.

Indus Motor Company saw its sales decline 31% to 37,773 units in FY13 against 54,477 units in FY12.

On the contrary, sales of Honda Atlas Cars rose a healthy 75% and the company sold 21,235 units in FY13 compared to 12,119 units last year. The increase in sales was aided primarily by higher production in FY13 compared to the previous year when production stopped for some time due to floods in Thailand. Parts for assembling Honda vehicles mostly come from Thailand.

Honda Civic sales shot up 100% and Honda City posted a decent growth of 58%. The sales boost helped Honda Atlas switch from a loss in FY12 to a profit in FY13.

On month-on-month basis, car sales increased 3% in June. Pak Suzuki sales remained stable at 6,977 units compared to 6,971 units a month earlier whereas Indus Motor fared well with sales of 4,243 units, up 13% from 3,768 units in May.

Honda Atlas suffered a 4% decline in demand, falling from 2,392 units in May to 2,307 units in June.

Published in The Express Tribune, July 11th, 2013.

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