January car sales plunge 25pc amid rising prices

KARACHI: Auto sales sank 25 percent month-on-month in January, and analysts expect a further decline as higher fuel prices, interest rates and vehicle costs made consumers reluctant to spend on big-ticket items.

Pakistan Automotive Manufacturers Association (PAMA) data released on Friday, showed auto volumes stood at 20,610 units in January as the industry saw quarter of their sales dropping as compared to 27,331 units in December. Industry analysts said the drop in car sales was due to the high base number of December.

“The auto sales were unexpectedly high in December,” said analyst Arsalan Hanif of Arif Habib Limited. “It was due to expectations of price increase because of increased taxation in the mini-budget in January.” Car sales witnessed the highest ever number of 27,331 units led by highest ever sales of Pak Suzuki in December. Suzuki also had some issues in delivering cars in November therefore the company’s volumes appeared abnormally high in December, which also pushed industry sales to record monthly high.

Analyst Muqeet Naeem at Ismail Iqbal Securities said January sales have normalised and were 18 percent higher as compared to January last year. “2022 started with healthy auto sales numbers, while the average lead time (delivery period of cars after booking) is around April and June, which suggests momentum to continue in upcoming months,” Naeem added.

Afterwards, we see car sales to reduce due to restrictions on auto financing, hike in car prices after the imposition of taxes in the mini-budget and higher interest rates.”

Indus Motors Company (IMC), which sells Toyota cars in Pakistan, was the only company that showed month-on-month sales growth of eight percent, selling 6,800 units. Its sales were 25 percent higher as compared to January last year.

Pak Suzuki sales showed a steep decline of 42 percent to 9,000 units in January as compared to December. Its sales were similar to what it sold in January last year with a negligible increase of 24 units. Alto, which showed record high sales in December with 9,200 units sold, saw its sales decline by 58 percent to 3,900 units in January. Honda Cars sold 4,046 units in January which were 14 percent lesser as compared to December and 66 percent higher as compared to January last year.

Pakistan’s top motorcycle seller by volume, Atlas Honda sales increased by four percent MoM and five percent year-on-year to 120,000 units. AGTL sold 1,950 tractors, which were 66 percent higher MoM and 45 percent higher YoY. This also helped the company increase its market share to 39 percent in January from 26 percent in December. Its lone competitor in the tractors segment, Millat Tractors sold 3,016 units, which showed a nine percent decline on a MoM basis and 22 percent decline as compared to January last year.