Car sales grow 28 months high to 15,770 units in January

KARACHI: Car sales grew at their fastest pace in 28 months in January, helped by new season demand and falling gasoline prices, industry date showed on Wednesday.
Car sales grew 65 percent month on month to 15,770 units in January 2015. Automakers sold 9,522 cars – from 1300 and above cc to 800cc and below – in December 2014, said Pakistan Automobile Manufacturers Association (PAMA). Total car sales were recorded at 11,955 units in January 2014, 32 percent low year on year.
Analysts said Pakistan consumers tend to make big-ticket purchases in the festive seasons or new years when manufacturers introduce new models which lead to “New Year registration phenomenon” in the country.
Analyst Adnan Haider at Sherman Securities said the monthly sales are highest in the last 2.5 years.
“The increase in auto sales is due to growing demand for new cars owing to better disposable income amid slowdown in inflation, declining car financing rates and lower oil prices,” said Haider.
He added that another reason for demand surge is that buyers usually prefer to get new vehicles registered in a new year.
Analyst Sufyan Subhani at Taurus Securities Limited said the new year phenomenon came into play as car production moved upwards.
‘For example, Indus Motors scaled up production to 6,000 units in January,” he added.
Tahir Saeed at Topline Securities said this year will bode well for Indus Motors.
“Its sales are expected to remain strong in the coming months due to continued higher sales of new ‘Corolla’,” said Saeed. “Indus has already done four-month advance booking for its new model car.”
Likewise, volumes of Pak Suzuki will increase on the back of upcoming Punjab Taxi Scheme, he added. “It is expected that Pak Suzuki will supply 2,500 to 3,000 units every month for the scheme.”
According to PAMA, automakers sold 74,497 passenger cars in the first seven months (July-Jan) of the current fiscal year. In the same period last fiscal year, the sales were registered at 64,834.
Tractor sales in January increased to 3,540 units from 2,400 units in December and 507 units in January a year ago.
The sales were recorded at 24,397 units in July-Jan FY15 from 19,564 units in July-Jan FY14.
“The increase in tractor sales is due to low general sales tax and growing agriculture credit,” said Subhani. “GST on tractors was cut to 10 percent in this fiscal year’s budget.”
Analysts however, said future volume growth will be driven by commercial registrations while private household purchases are likely to falter despite falling gas prices and cut in interest rates.
“There was some positive impact on the sales numbers of Suzuki in January due to invoicing of Taxi Scheme. And in months to come both Ravi and Bolan, will be delivered under taxi scheme will bring more good numbers for the company,” one analyst said.