Cars sales slash by 50 percent as rising prices suppress demand
Pakistan’s auto sector has witnessed a massive decline in sales by 50 percent, the lowest in more than two years, due to rising prices which have suppressed demand.
According to a report, most of these vehicles belonged to companies that are not members of the Pakistan Automotive Manufacturers Association (PAMA).
According to data compiled by Topline Securities, 4 wheelers sales fell by 51 percent year-on-year, with the latest figures showing first-quarter sales at 34,472 units, down 50 percent from last year.
Tahir Abbas, head of research at Arif Habib Limited (AHL), said that the main reason for the sharp decline in car sales was the restrictions imposed by the State Bank of Pakistan (SBP) on the import of fully-manufactured kits, which are used to manufacture vehicles locally.
The SBP’s move is aimed at controlling the outflow of dollars from the economy in view of the continued decline in the local currency.
He said that fully finished kits are being imported on quota basis which has reduced the production and sales of vehicles.
Abbas added that the flood situation in most parts of the country has also reduced the demand for vehicles in the rural areas.
“Isn’t it surprising that tractor sales in September stood at just 2,149 units, a decline of 51 percent and 46 percent on year-on-year and month-on-month basis, respectively,” he asked.
Tahir Abbas further said that, “the overall economic situation is not favorable for the purchase of vehicles as the abnormal rate of inflation has affected the purchasing power of potential car buyers.”
The data shows that all auto companies except Pak Suzuki Motor Company Limited reported a decline in sales on a monthly basis, with Pak Suzuki’s sales increasing by 52% due to the ‘low base effect’.
Topline Securities said plant shutdowns due to non-availability of fully finished kits limited its sales to 3,954 units in August from 6,006 units in September.
Indus Motor Company Limited’s sales recorded a month-on-month decline of 32% to 2,617 units, while Honda Atlas Car Limited’s sales declined by 29% to 1,280 units during the same period. Hyundai Nishat Motor Ltd’s sales also fell by 50% month-on-month to 967 units in September, while Tucson sales fell by 62%.
In tractor sales, Millat Tractors Limited recorded a decline of 75 percent and 72 percent on monthly and annual basis respectively.
Al Ghazi Tractors Limited recorded sales of 1,511 units, up by 6 percent from last month but down by 29 percent on a year-on-year basis.
Motorcycle sales fell by 7 percent and 39 percent on a monthly and annual basis, respectively. Atlas Honda Ltd sold 80,542 units in September, which is almost the same as last month’s sales but down by 23 percent from a year earlier.