KARACHI: Sales of locally-assembled automobiles rose by a whopping 80 per cent during March compared to the same month in the previous year, according to figures released by the Pakistan Automobile Manufacturers Association on Monday.
A total of 12,618 cars were sold by Pakistani automobile manufacturers during March, which brings the total number of cars sold for the fiscal year that began on July 1, 2009 to 97,918. This represents a 34 per cent annualised increase compared to the corresponding period of the previous fiscal year.
Among the key drivers of growth for the industry has been the Toyota Corolla, manufactured locally by the Indus Motor Company, Toyota’s Pakistani associate.
Corolla sales had also been the single biggest factor in February’s growth figures, which had been similarly positive, leading some analysts to fear that the recovery in the automobile market may be confined to the upper end of the consumer spectrum.
However, March sales figures suggest a pick-up in demand for smaller cars, suggesting a wider recovery.
“Strong smaller car sales indicate that a broad-based recovery is in the offing,” said Muhammad Saqib Sajjad, a research analyst at KASB Securities, a leading investment bank, in a note issued to clients on Monday.
Pak Suzuki Motor Company, one of the leading manufacturers of smaller cars in the country, saw its sales figures rise by an astounding 211 per cent in March compared to the same period in the previous year, largely due to the fact that its sales last year had been abysmal.
The March figures represent a recovery to normal and a possible indication of better revenues in the coming months. Not all analysts, however, were optimistic about the prospects for the automobile market, however.
“(While) automobile sales have remained buoyant until now, we anticipate a slight decline moving forward,” said Sana Bawani, a research analyst at BMA Capital in a note issued to clients. “Price elasticity could potentially be a key reason behind the anticipated decline.”
Price elasticity refers to the sensitivity of consumers to prices. Automobile prices are beginning to reach the point where most consumers are now deterred from purchasing newer vehicles, preferring preowned cars instead.
This phenomenon seems to be already affecting Honda, which saw its sales decline by 35 per cent during March compared to the same month last year.
High prices, coupled with competition from Toyota, have hit the company’s revenues hard, according to Atif Zafar, analyst at JS Global Capital.
Update: The earlier version of this article used incorrect chart.