Vehicle sales surges 30pc in 11 months of FY15

KARACHI: Vehicle sales in Pakistan shot up almost 30 percent to 162,151 units in first eleven months of the current fiscal year, reinforcing signs of economic recovery with a sustained demand on cheap financing.
Analyst Muhammad Tahir Saeed at Topline Research said the growth was backed by the launch of new model of Toyota Corolla, taxi scheme of Punjab government and a surge in car financing due to 42-year low interest rates.
Last month the central bank cut interest rate for the fourth straight time to a 42-year low of 7 percent from 8 percent in a bid to spur economic growth.
Pakistan Automotive Manufacturers Association (PAMA) said the Pak Suzuki Motors (PSMC) sales increased by 64 percent YoY to 11,477 units in May 2015. Volumes also improved five percent on Month-on-Month (MoM) basis. The taxi Scheme was the main catalyst behind the increase of PAMA’s last month.
During July-May of fiscal 2014/15, PSMC sales raised to 89,084 units versus 69,866 units same period last year. Analyst said the improvement was attributed to the invoicing of cabs under the ‘Taxi scheme’.
Indus Motors (INDU) sold 5,507 units in May 2015 compared to 2,917 units during the same month last year. On MoM basis, INDU sales decreased by six percent from 5,837 units in April 2015. During 11MFY15, sales increased 58 percent YoY to 51,485 units.
Honda Cars (HCAR) sold 2,353 units in May 2015 compared to 2,260 units in the same month last year. On Month-on-Month basis, HCAR sales decreased by one percent in May 2015 from 2,376 units in April 2015.
Sales of HCAR have remained fairly stable at 21,134 units in 11MFY15 versus 21,002 units in the same period last year. Analyst said HCAR 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,” Saeed said.
He added that the local car sale is likely to grow by 30 percent to 177,825 units while 37 percent growth in tractors sales is also expected during the current year.
“Volumetric growth coupled with weak Japanese Yen (JPY) against US dollar will have a positive impact on the profitability of auto sector,” Saeed said.
Tractor segment also posted decent growth of 34 percent YoY during 11MFY15 to reach 42,784 units, primarily due to reduction in General Sales Tax (GST) to 10 percent from 16 percent.
Saeed said government’s decision to maintain GST at 10 percent in the federal budget for the next fiscal year will support the growth momentum in tractors volumes.
Analysts said a 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 percent versus five percent few years back, thanks to 42-year low interest rates in the country, they added.
Saeed said the lower tax is also aiding the Millat Tractors (MTL) and Al Ghazi (AGTL). MTL sold 2,729 units in May 2015 compared to 2,365 units in the same month last year. On Month-on-Month basis, MTL sales decreased by 21 percent in May 2015 from 3,456 units in Apr 2015
During 11MFY15, sales of MTL surged significantly by 30percent to 26,155 units mainly due to reduction in GST. AGTL sold 1,551 units in May 2015 compared to 752 units in the same month last year. On Month-on-Month basis, AGTL sales decreased by one percent in Apr 2015 from 1,572 units in Apr 2015. Sales of AGTL posted a decent growth of 43 percent to reach at 15,703 units during 11MFY15.