Sales of Pakistan’s locally assembled vehicles increased by 12 per cent to 257,600 units during the last fiscal year (2015-16), mainly because of rising auto financing from banks and other financial institutions and low mark-up rates in the banking industry.
The car sales increased to 216,000 units, up by 21 per cent in the last fiscal year while heavy commercial vehicles (HCVs) sales increased by 40 per cent to 6,600 units, data released by the Pakistan Automotive Manufacturing Association (PAMA) on Wednesday showed.
Total car sales went up owing to higher contribution from Pakistan Suzuki Motor Company (PSMC) because of the Punjab government’s taxi schemes. Within the cars segment, PSMC sales increased by 28 per cent to 127,000 units, mainly on account of 31 per cent and 27 per cent higher sales of Ravi & Bolan under ‘Apna Rozgar Scheme’. Meanwhile, INDU (Toyota) and HCAR (Honda) sales grew by 12 per cent and 9 per cent to 64,000 and 26,000 units respectively.
HCVs sales also improved by 40 per cent to reach 6,567 units in the last fiscal year, wherein, HINO volumes witnessed 65 per cent uptick to 3,279 units, while GHNI volumes grew by 54 per cent to 1,566 units. On the other hand, GHNL sales have dwindled by 6 per cent to 804 units during 2015-16.
However, tractors sales have nosedived by 26 per cent year on year to 34,618 tractors, due to 26 per cent lower MTL sales to 21,000 units and 25 per cent lower sales by AGTL to 16,000 units. Seasonal down cycle, low farmer income and anticipated subsidy schemes were the major reasons behind the slowdown.
On MoM basis, HCVs sales improved by a meager 2 per cent to 752 units, with 14 per cent higher sales of GHNI; however, HINO sales have declined by 4 per cent MoM to 321 units.
Car sales declined by 10 per cent to 15,000 units on MoM, owing to 23 per cent slowdown in HCAR (because of expected launch of new Honda Civic in July 2016), 11 per cent decline in sales volume of PSMC and 2 per cent decline in INDU sales. However, tractors sales remained stagnant at 4,000 units in June 2016.
In 2016-17, analysts expect auto sales to remain close to current levels despite the completion of ‘Apna Rozgar’ taxi scheme. Higher contribution from HCAR due to their new Civic model’s launch in the first quarter of the current fiscal year and higher tractor sales (MTL tractor export initiative and pro-agriculture measures in the 2016-17 budget) may further support the auto industry. Moreover, ramping-up of the China-Pakistan Economic Corridor (CPEC) related development projects coupled with higher PSDP allocation will generate spur demand for HCVs in the future.
Mohammad Afaq Nasir, analyst at Insight Securities, a local brokerage house, said, “Though low interest rates, growing economic activity and rising consumer demand/purchasing power will keep providing support, we expect about 9 per cent lower car sales in the current fiscal year due to absence of any subsidy scheme on cars. Margins scenario has also become tough due to recent Japanese Yen appreciation and the feared Pak Rupee depreciation.”