Local auto industry starts reaping benefits of depleting import stockpile

Total sales grow 4% to 21,675 units in July-August period.

KARACHI: The local auto sector rebounded in August after a dismal opening month of the fiscal year 2013-14 as depleting stockpile of used car imports have stripped customers off choices apart from buying locally produced cars. Moreover, Honda’s recently-launched flagship cars le the pack to a growth of 4% in sales in the first two months of fiscal 2014 according to data from Pakistan Automobile Manufacturers Association (Pama).

According to the latest figures released, locally manufactured car sales, including light commercial vehicles and jeeps, clocked in at 21,675 units in the July-August period of the fiscal year 2013-14, 4% higher than in the corresponding period of previous fiscal.

Shajar Capital analyst Faizan Ahmed also attributed the growth in August to the diminishing effect of pre-budget buying seen last month as sales of locally assembled cars clocked in at 11,096 units, up 7% from 10,385 units in the corresponding month of last year.

Automakers believe sales have slowed down because of used car imports over the last few years more than anything else. But succumbing to the pressure from the local car industry, the previous government reduced the age limit of used car imports to three years from five years in December 2012, owing to which car imports have declined significantly in the last seven months and the local auto industry has now started reaping the benefits despite a hike in sale tax to 17% in the budget as customers lack choices.

According to the Shajar Capital research note, the overall growth primarily stems from improved sales from Honda to 4,089 units, up 41%, as the company’s flagship Civic proves to be a hotcake. Pak Suzuki Motor Company, on the other hand, saw sales remaining virtually flat at 11,679 units, while Indus Motor Company – the makers of Toyota Corolla – witnessed sales declining 6% to 5,817 units.

Honda managed to more than double its sales of the recently launched Honda Civic in the July to August period, selling 1,755 units compared to 707 units in the corresponding period of last year. The other two assemblers, however, have lost ground to Honda as they have failed to launch any newer models to attract customers.

Published in The Express Tribune, September 11^th,  2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.