Auto sales are expected to further decline by an estimated 20-25 per cent in anticipation of a three per cent decline in auto prices starting 1 July. The decline is due to the removal of 2.5 per cent SED and a cut of one per cent in General Sales Tax (GST).
“Auto sales in FY11 are likely to overshoot initial estimates of 137,000 cars by eight per cent, and the sector is expected to face problems in growth on the back of increased regulatory risks and continuous rise of the Japanese yen against the Pakistani rupee,” said Atif Zafar at JS. However, the Punjab govt.’s allocation of Rs4.5 billion to provide 20,000 yellow cabs is likely to act as a major catalyst for Pak Suzuki Motor Company.
While car sales have declined by a notable six per cent since last year in May, an increase of 23 per cent yearly in the sales of LCV’s largely mitigated the impact of the decline. However on a month to month basis, auto sales plunged by five per cent. This was largely due to production cuts suffered by the local auto assemblers coupled with relaxation of the auto import policy by the government.
Auto sales in May declined by a nominal one per cent compared to last year, however Indus Motor (INDU) and Honda Car (HCAR) witnessed substantial falls of 15 per cent and 37 per cent annually, respectively. The decline in INDU was a consequence of the company suspending the booking of its vehicles for a period of 22 days in April this year due to earthquakes in Japan.
HCAR witnessed significant production disruptions too for the same reason. On the other hand, Pak Suzuki (PSMC) sales increased by a substantial 20 per cent compared to last year. The abnormal growth in sales of PSMC was because of the back log of booking for its CNG fitted vehicles. Earlier the company had halted booking of its CNG based vehicles due to suspension of its supplier’s license by authorities.
It is believed, another reason for a decline in the local auto sales is the rising share of imports after the relaxation of auto import policy in December by the government. As a result auto imports in April stood at 1,799 units, a rise of 166 per cent from the previous month. The average monthly sales from January to April in 2011 added up to 1,070 units, compared to an average monthly sale of 274 units in FY10.
Local car assemblers ( Suzuki, Honda , Toyota ) who have been enjoying the monopolistic position in Pakistan for a long time , deliberately produce the car below of their optimal production capacity. As the capture they major share of auto market in our country know very well that they can charge inflated price of their manufactured good , becouse people have no other option to buy a car at all. and unfortunately their is no mechnism of price and quality controlling , operating in pakistan. and Pakistani Govt focus upon commiting corruption only ( Jis mulk ka President aik Qaidi huga uska Allah he hafiz ). So if Government takes a rationalistic steps should relaxe the import policy of used car in short and new investor into auto sectors all around the world should be enough to normalise the car price ) .No Investment into auto sector and easy import policy will not only break up japansse assemblers monoply, but also widen the range of economic activities. Corrupt administration would also be benefitted in open trade and news investors ( Jitni ziada economic activities hugein, dhehari lagany kay chance bhe utny he ziada hu jaeyga
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