KARACHI: Local car sales in the country have registered a growth of 31% year-on-year – highest in the last five years – and touched 179,953 units in fiscal year 2015 compared to 136,888 units in the same period previous year.
This improvement was better than the 1% growth in fiscal year 2014 and surpassed the 5-year (FY11-15) compound annual growth rate (CAGR) of 5.3%.
Local vehicle sales (including light commercial vehicles (LCVs), vans and jeeps) increased due to Toyota Corolla’s new model, taxi scheme by Punjab government, rising consumer sector dynamics and an increase in car financing due to the 42-year low interest rate in the country, Topline Securities reported on Friday.
It is important to note that imports of used cars are still hovering around 25,000-30,000 units per annum. The imports make around 15% of car sales in Pakistan.
In fiscal year 2016, Topline estimates that the locally assembled car sales will grow by 13% to 203,653 units.
Tractor segment also posted a healthy growth of 39% year-on-year during the outgoing fiscal year 2015 to reach 46,800 units, primarily due to reduction in General Sales Tax (GST) from 16% to 10%, announced in Federal Budget FY15. This compares favorably with -34% growth in FY14 and 5-year (FY11-15) CAGR of -9.3%.
Subsidy schemes that include 25,000 tractors by Punjab government and 29,000 tractors by Sindh government will further boost growth momentum in tractors volumes, the report said. The volumetric growth coupled with weak yen against the dollar will have a positive impact on the profitability of the auto sector.
Pak Suzuki Motors
During fiscal year 2015, Pak Suzuki sales rose to 98,879 units, up 27% year-on-year because of the invoicing of cabs under the ‘Taxi scheme’. “We are expecting that PSMC will sell around 30,000-35,000 units under the taxi scheme in fiscal year 2016 and order of 50,000 units will be completed in the first half (Jul-Dec) of 2017,” the report said, adding that the volumes of the company may grow by 24% in fiscal year 2016 to reach at 122,617 units.
Indus Motors achieved its highest ever sales since the inception of the company by selling 56,943 units in fiscal year 2015, up 67% year on year. It is important to note that the company’s annual production capacity is 54,800 units so company achieved these levels through debottlenecking and working on alternate Saturdays.
This phenomenal increase is due to Toyota’s new Corolla model, which is still sold out for the next three to four months, according to sources in the industry, the report said.
The sales of Honda Atlas Cars have remained stable at 23,622 units in fiscal year 2015 compared to 23,674 units last year. It is important to note that the company maintained its sales growth despite the new model of Toyota Corolla launched by its competitor Indus Motors. This indicates that overall market size of Pakistan automobile sector is growing.
Published in The Express Tribune, July 11th, 2015.