Robust demand: Car sales jump 30% year-on-year

Auto financing also picking up gradually with current estimates at 30%.

KARACHI: Local car sales in the first 11 months (Jul-May) of fiscal year 2015 (11MFY15) have jumped to 162,151 units, up 30% year-on-year (YoY), according to Pakistan Automotive Manufacturers Association (PAMA) data.

Pakistan local car assemblers have consistently registered healthy growth in vehicle sales (including light commercial vehicles (LCV), Vans and Jeeps) on the back of new model of Toyota Corolla, taxi scheme of Punjab government, and an increase in car financing due to 42-year low interest rates in the country.

Healthy growth in auto sector is indicative of increase in per capita income, improved farmer economics and overall recovery of the economy.

Car financing is also picking up gradually (currently estimated at 30% versus 5% few years back), thanks to 42-year low interest rates in the country, a Topline Securities report said on Thursday.

Tractor segment also posted decent growth of 34% YoY during 11MFY15 to reach 42,784 units, primarily due to reduction in General Sales Tax (GST) from 16% to 10%, announced in Federal Budget FY15.

The government’s decision to maintain GST at 10% in the current federal budget FY16 will support the growth momentum in tractors volumes, the report added.

In fiscal year 2015 (FY15), local car assembler sales will grOw by 30% to 177,825 units while 37% growth in tractors sales is also expected, the report said.

Amongst individual companies, Pak Suzuki Motor sales increased by 64% YoY to 11,477 units in May 2015. In 11MFY15, Pakistan Suzuki sales rose to 89,084 units versus 69,866 units in the same period last year.

Indus Motor sold 5,507 units in May 2015 compared to 2,917 units in the same month last year. During 11MFY15, Indus Motor sales increased 58% YoY to 51,485 units.

Honda Atlas Cars sold 2,353 units in May 2015 compared to 2,260 units in the same month last year. Honda Atlas Cars sales have remained stable at 21,134 units in 11MFY15 versus 21,002 units in the same period last year.

Published in The Express Tribune, June 12^th, 2015.

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