Auto sales take a hit, increase just 1%
According to Pakistan Automobile Association of Pakistan (PAMA), total sales of automobiles in the last month FY14, including cars, light commercial vehicles (LCVs) and jeeps, dropped by 2% month on month (MoM) to 12,081 units compared to 12,337 units in May 2014.
Sales remained subdued as uncertainty on the import duty front kept most of the buyers away from making a decision. Similarly, the expected introduction of the new model of Corolla by the end of July 2014 has reduced the sales of the said variant of Indus Motor, InvestCap Research said on Friday.
Car sales alone inched down 0.6% year on year (YoY) to 118,102 units whereas sale of LCV and jeeps registered growth of 12.6% year on year to 18,786 units during the period under review.
Out of the three carmakers, two introduced new models in the outgoing year. Atlas Honda Motors introduced Honda City Aspire and Honda CR-Z while Pak Suzuki introduced Suzuki Wagon R.
New Corolla model to steal the show
Indus Motor is all set to introduce its new Corolla model at the end of July, which is expected to boost the company’s sales due to a lack of competition in the same segment. Therefore, overall auto sales will experience a boost along this new model, the report added.
Similarly, a strong Pakistani rupee against the dollar and the yen is expected to keep the cost of production lower and hence, the prices of cars will remain intact that will further help support auto sales in the current year.
Moreover, analysts believe the improvement in core economic indicators will also help sales in the current fiscal year.
Lower economic growth for the past few years (FY08-14 average GDP growth at 3.3%), low auto financing by the banks, and higher availability of substitutes (imported cars) are key factors behind lower than expected car sales performance, a Shajar Capital report said on Friday.
The industry’s sales continue to be acutely short of all time high sales of 187,400 units in FY08.
Among the individual players, Pak Suzuki sales rose by mere 3% YoY whereas Indus Motor sales witnessed a decline by a significant 10% YoY. The only company that showed better performance is Atlas Honda Cars which posted a growth of 11% YoY.
Published in The Express Tribune, July 12th, 2014.
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