The sales of the locally assembled cars have gone up by 66 per cent to reach 111,720 units in the first half of the current fiscal year (2015-16) against only 67,426 units in the same period last year, the data released by the Pakistan Automotive Manufacturers Association (PAMA) said on Monday.
However, the sales of locally assembled cars and tractors (including LCVs) declined by 5 per cent to 18,150 units in December 2015 due to seasonal slowdown as buyers tend to defer car purchases until next year.
“The main reason behind the rising sales of cars is said to be declining interest rates of the banking channels especially for the auto financing as well as overall improvement in the economic situation of the country,” said Topline Brokerage House analyst Muhammad Tahir Saeed.
In a recent development, Pak Suzuki (PSMC), Indus Motors and Honda increased the prices of all of their models by 1 per cent in December 2015 following the government decision of increasing one per cent custom duty on the import of all accessories of the vehicles. Car assemblers were able to pass on the cost hike to the customers due to strong demand in the country.
The government has not yet announced the Auto policy for the next five years but Engineering Development Board (EDB) has submitted the final draft policy to the Ministry of Industries in December 2015. In the policy, the EDB has recommended to give incentives to the newcomers in the auto sector and asked the government to force the companies to deliver the vehicles on time and in case of non-delivery in 60 days, the company will pay back interest on the total amount paid by the customers at the time of the booking.
The analyst forecast that local car sales will grow at 15 per cent in the rest of the fiscal year 2015-16 to reach 206,777 units. This lower growth is due to completion of taxi scheme in February 2016 and decline in Honda Civic volumes in anticipation of new model, which is expected to hit the market in July 2016.
Amongst individual companies, PSMC sales increased by 97 per cent year on year to 70,482 units in the first half 2015-16 primarily due to Punjab government’s taxi scheme.
Contrary to historical trend of December, volumes increased by 3 per cent month on month in December 2015 primarily due to the taxi scheme. Historically, it has been observed that customers defer their buying in December due to year-end phenomenon as they usually prefer to purchase and register their vehicles in the first month of the new year.
INDU sold 30,481 units in first half 2015-16 up from 22,883 units in the same period last year.
In Dec 2015, INDU sales stood at 4,738 units, up 16 per cent YoY. On MoM basis, sales declined by 14 per cent YoY due to year-end phenomenon.
Honda sold 10,610 units in the first half 2015-16 compared to 8,578 units during the same period last year. In December 2015, HCAR sold 1,028 units, up 49 per cent YoY (down 33 per cent MoM).
“Volumes of Honda Civic are expected to dry out in the coming months in anticipation of new model launch in July 2016,” the analyst said.
DELAY IN SUBSIDY AFFECTS TRACTOR SALES:
Pakistan’s tractor segment posted a decline of 41 per cent YoY during the first half 2015-16 to reach 12,375 units. This decline is because of the delay in the launch of provincial tractor subsidy schemes. Punjab and Sindh governments announced in the 2015-16 budget that a subsidy of 25,000/29,000 would be offered on each tractor.
Millat Tractors (MTL) and Al-Ghazi Tractors (AGTL) both witnessed a decline in their volumes during first half of 2015-16.
Industry sources revealed that farmers were waiting for the implementation of the announced subsidy schemes by the Punjab and Sindh governments. On the other hand, tractor manufacturers are requesting government either to implement or to shelve the announced schemes so that farmers resume their normal purchasing.
MTL sold 7,916 units in the first half 2015-16 compared to 12,811 units in the same period last year. On MoM, MTL sales decreased by 46 per cent to 774 units in December 2015.
During the first half 2015-16, AGTL witnessed a decline of 48 per cent YoY in its sales to 4,020 units. The company sold 144 units in December 2015, down 81 per cent YoY (-81 per cent MoM).
Trucks and buses segment of Pakistan’s automobile sector posted an increase of 40 per cent YoY to reach 2,645 units during first half 2015-16. This surge was due to rising demand because of the China Pakistan Economic Corridor (CPEC) project and improving law and order situation in the country.
