Car sales plunge 64pc y/y in December as inflation, interest rates bite

KARACHI: The car sales plunged 64 percent in December from a year earlier, as high inflation, currency depreciation and interest rates dampened consumer demand, data from an industry body showed on Thursday.

The Pakistan Automotive Manufacturers Association (PAMA) said its members sold 4,916 cars last month, compared with 13,780 in December 2022. However, sales rose slightly from 4,798 in November 2023, indicating some seasonal recovery.

For the first half of the fiscal year 2023/24 (July-December), car sales dropped 55.5 percent to 30,662 units from 68,912 in the same period a year ago, PAMA said. The decline was across all segments, with sales of cars above 1,300 cc falling 60 percent, those of 1,000 cc cars falling 63 percent, and those of below 1,000 cc cars falling 67 percent.

Sales of 1300 cc and above cars were recorded at 1,785 units in December, 1,000 cc at 706 units and below 1,000 cc vehicles recorded a sale of 2,425 units. The sale of commercial vehicles, such as buses, trucks, jeeps and pick-ups, also fell sharply, by 69 percent to 1,005 units in December from 3,518 a year earlier.

The sale of buses and trucks decreased to 105 units in December 2023 from 286 units in December 22. The sale of jeeps and pick-ups decreased to 900 units from 3,232 units sold during the same period in the year 2022. Sales of tractors rose to 2,605 units from 1,015 units in December 2022. Tractor sales faced a 26 percent month-on-month suppression in Deccember 23. AGTL reported a sharp decline of 28 percent month-on-month, while MTL sales arrived at 2,099 units, shrinking by 25 percent month-on-month.

The sale of rickshaws and motorbikes decreased to 82,362 units during December 2023 against 103,899 units in the same period in 2022. Bike sales volumes experienced a seven percent month-on-month and 21 percent year-on-year decline in Dec’23.

Atlas Honda (ATLH) recorded 72,000 units in sales, registering a decrease of 5 percent month-on-month and 15 percent year-on-year. Brokerage Arif Habib Ltd said the slump in auto sales could be attributed to multiple factors, such as an overall reduction in consumer purchasing power, an unprecedented surge in inflation, depreciation of the Pakistani rupee, and higher interest rates, which have collectively contributed to a weak demand for new passenger vehicles.

"Additionally, the year-end effect played a role in maintaining sales at the lower level." Segment-wise, the 1,300cc and above category witnessed a 12 percent month-on-month decline, while the 1,000cc segment experienced a three percent month-on-month decrease. On the flip side, the below 1000cc segment showcased a jump of 15 percent month-on-month, settling at 2,425 units.

Indus Motors reported a 28 percent month-on-month decline in volumetric sales in Dec’23, clocking in at 684 units, primarily attributed to a 51 percent month-on-month plunge in Fortuner and Hilux sales.

Pak Suzuki, on the other hand, displayed an uptick of seven percent month-on-month in overall sales during the same period. In contrast, Honda Atlas Cars' volumetric sales plummeted by 11 percent month-on-month in Dec’23, which is owed to a 14 percent month-on-month reduction in Civic/City sales, settling at 787 units.