Auto sales jump 10pc to 237,000 units in July-May

KARACHI: Auto sales climbed more than 10 percent in the first 11 months of the current fiscal year as local manufacturers sold 237,000 units of cars, jeeps, light commercial vehicles, tractors, trucks and buses during this period, industry data showed on Friday.

The data released by the Pakistan Automotive Manufacturers Association (PAMA) showed that auto companies sold 201,011 cars, jeeps and light commercial vehicles in July-May period of 2015/16, up 24 percent over the same period of the last fiscal year.     

Equity analyst Hasan Azhar at Taurus Securities Ltd said the growth was mainly led by rise in auto financing. Interest rate came down to 40-year low.

Pak Suzuki recorded 33 percent surge in its car sales to 119,000 units in July-May 2015/16. Majority of its sales was because of taxi scheme of the Punjab government.

The second market player Indus Motors registered 14 percent rise in sales to 59,000 units in the period under review, owing to robust demand for its Corolla model.

Sales of Honda Cars improved seven percent to 23,800 units in July-May.

Analyst Hamza Raza at Topline Securities said Honda City was the main contributor to the sales growth. 

Raza said volumes of Honda Civic are expected to dry out new model of Civic (10th generation). Pre-booking for the same has already begun, he added.

Azhar is optimistic about auto volume growth. “We believe car sales would cross 215,000 units in FY16, owing to completion of taxi scheme and improved average volumes of Indus Motors,” he said.

He further said banks’ focus on high-return auto financing will pique consumer appetite for new cars.

In May, car sales inched down one percent month-on-month to 17,000 units.

Honda witnessed a nine percent drop in sales to 2,507 cars in this month. Both Pak Suzuki and Indus Motors, however, enjoyed one percent rise in sales to 9,037 and 5,544 units, respectively.

Car sales declined 12 percent year-on-year in May. Pak Suzuki experienced 21 percent fall in sales. Honda sales were up seven percent, while sales of Indus Motors remained flat.

The PAMA data showed that sales of tractors decreased 28 percent to 30,607 units in July-May.    “We can attribute this downward trend in sales to the low crop production during the period and weak farmers’ income,” Azhar said.

He said both year-on-year and month-on-month, sales of tractors slid nine percent to 4,021 units, “as the Punjab and Sindh governments shelved their subsidy schemes announced in provincial budgets of 2015/16.”  Raza said farmers have resumed regular purchases due to uncertainty in subsidy scheme. “This year’s budget is full of incentives to the agriculture sector, including reduction in urea prices and financing rates,” he added. “This should help improve liquidity with farmers, resulting in better offtake of tractors.”

The PAMA data showed that sales of trucks and buses declined 42 percent to 5,815 units the July-May period of 2015/16. In May, total 739 trucks and buses were sold as compared to 625 in April and 518 in May a year ago.

Sales of bikes and three-wheeler shot up 25 percent to one million in July-May over the same period a year earlier.