Local assemblers of cars, including LCVs, vans and jeeps, have registered 57 per cent year-over-year (YOY) growth during the first seven months of the ongoing fiscal year, owing to the increasing car financing by banks and leasing companies and 42-year low interest rates.
According to Muhammad Tahir Saeed, an analyst at Topline brokerage house, said the main reason behind the increase in sale of cars and other vehicles is car financing, lower interest rate, better security situation and improvement in the country’s economic situation overall.
Between July 2015 and January 2016, local vehicle sales stood at 133,437 units compared to 85,135 units in the same period of the previous fiscal year.
The analyst predicted that the local car sales would grow at 15 per cent in 2015-16 and reach 206,777 units. “This lower growth is due to expected completion of taxi scheme in February 2016 and decline in Civic volumes in anticipation of new model which is expected to hit the market in mid-2016,” he added.
PSMC: Amongst individual companies, the PSMC’s sales increased by 90 per cent YOY to 83,188 units in July 2015-January 2016 primarily because of the Punjab government’s taxi scheme. Volumes increased by 59 per cent YoY (+3 per cent MoM) in January 2016 primarily due to taxi scheme. Contrary to historical trend of high growth in the month of January 2016, the PSMC’s volumetric growth in January 2016 remained three per cent.
INDU: The INDU sold 36,448 units in July2015 to January 2016 compared to 29,298 units in the same period last year. In January 2016, the INDU’s sales stood at 5,967 units, registering a drop of seven per cent YoY due to high base of last January since a new model of Corolla was launched last year. On MoM basis, the sales increased by 26 per cent YoY due to New Year registration phenomenon. It is important to note that delivery time for new corolla model is still hovering in the range of two to four months depending on the variant.
HCAR: The HCAR sold 13,625 units in July 2015 to January 2016 compared to 11,799 units in the same period last year. In January 2016, the HCAR sold 3,015 units, registering a decrease of six per cent YoY (up 193 per cent MoM). Honda City remained the major contributor in this growth. Volumes of Honda Civic are expected to dry out in the coming months in anticipation of a new model to be launched in the middle of this year.
Millat Tractors (MTL) & Al Ghazi (AGTL): Pakistan’s tractor segment posted a decline of 40 per cent YoY during July 2015 to January 2016 to reach at 14,727 units. This decline is because of the delay in the launch of provincial tractor subsidy schemes. The Punjab and Sindh governments in their budgets of 2015-16 announced a subsidy of Rs 25,000 to Rs 29,000. Both Millat tractors and Al-Ghazi tractors witnessed a decline in their volumes during July 2015 to January 2016. Sources revealed that farmers were waiting for the execution of announced subsidy schemes by the Punjab and Sindh governments. On the other hand, tractor manufacturers are requesting the governments either to execute or shelve the announced scheme so that farmers resume their normal purchasing. MTL sold 9,178 units in July 2015 to January 2016 compared to 14,965 units in the same period last year. However, MTL sales increased by 63 per cent MoM to 1,262 units in January 2016. During July 2015 to January 2016, AGTL witnessed a decline of 45 per cent YoY in its sales to 5,004 units. The company sold 984 units in January 2016, registering a decline of 25 per cent YoY (+583% MoM).
Meanwhile, Pakistan’s trucks and buses’ sector registered an increase of 40 per cent YoY to reach at 3,246 units during July 2015 to January 2016. Analysts attribute this surge in demand to the China Pakistan Economic Corridor (CPEC) projects and better law and order situation in the country.
