Local vehicle sales surge 66pc in July-Nov on easy bank financing

KARACHI: Vehicles sales in Pakistan leapt 66 percent to 93,570 units in the first five months of the current fiscal year as increased supply met pent-up demand on strong consumer spending and easy auto financing, analysts said on Friday. 

The Pakistan Automobile Manufacturers Association (PAMA) data showed that sales of vehicles, including light commercial vehicles, vans and jeeps stood at 56,339 units in the same period of the last fiscal year.   Analysts said healthier economic environment and all-time low interest rate led to increased auto financing, while Punjab government’s taxi scheme also gave a boost to the local automobile industry.  They said, however, this growth trend may not continue in the current fiscal year. 

“The local car sales are expected to grow at 13 percent to reach 203,941 units in FY16,” said auto analyst Tahir Saeed at Topline Research. 

“This will be due to completion of taxi scheme in February 2016 and decline in Civic volumes in anticipation of the new model, which is expected to hit the market in July 2016,” Saeed said.

Sales of Pak Suzuki Motors increased 97 percent to 58,098 units during the July-November FY16, primarily due to the taxi scheme.

Indus Motor sold 25,743 units in the five-month period of the current fiscal year as compared to 18,786 units in the same period of the last fiscal. 

In November, Indus Motor sales stood at 5,516 units, up 23 percent year on, whereas month-on-month sales remained flat.

Honda Cars sold 9,582 units in the five-month period compared to 7,888 units in the same period last fiscal.   In November, Honda sold 1,523 units, up 20 percent YoY, but down 19 percent MoM.

Both Indus Motors and Honda Cars have increased car prices by 1.0-1.5 percent owing to the one percent hike in custom duty. Car assemblers passed on cost hike quite easily due to the strong demand in the country.  Volumes decreased three percent month on month due to deferred buying of customers owing to year-end phenomenon. 

“This declining trend will continue in December because customers usually prefer to purchase and register their vehicles in the first month of the New Year,” Saeed said.  Tractors sales posted a decline of 38 percent to 11,418 units. 

“This decline is due to the delay in the launch of the provincial tractor subsidy schemes. Punjab/Sindh governments announced subsidies for 25,000/29,000 tractors in the current fiscal year’s budgets,” Saeed said.  Delay in subsidy of tractors affected the sales of Millat Tractors (MTL) and Al Ghazi (AGTL).  Both witnessed a decline in their volumes during July-November 2016. 

MTL sold 7,142 units in July-November compared to 11,247 units in the same period of the last fiscal. MTL’s November sales stood at 1,421 units.

In July-November, AGTL witnessed a decline of 44 percent YoY in its sales to 3,876 units. The company sold 744 units in November 2015, down 64 percent YoY and on month-on-month its sales dropped 26 percent.  Sales of trucks and buses posted an increase of 39 percent to 2,115 units during the period.   Analysts said the high demand is due to China-Pakistan Economic Corridor and improving law and order situation in the country.

Sales of motorcycles and three-wheeler remained at 77,060 units in November, down from 79,058 units in October.