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January 11, 2019

Passenger car sales up 0.5 percent in first half of FY19

Business

January 11, 2019

KARACHI: Passenger car sales clocked in at 104,038 units in the first six months of FY19, slightly higher by 0.58 percent than 103,432 units in the corresponding period last fiscal year, Pakistan Automotive Manufacturers Association (PAMA) data revealed on Thursday.

A total of 52,243 cars of 1300cc and above were sold during this period against 47,087 cars in the corresponding period last year, showing an increase of 11 percent. In 1000cc car category, a total of 26,838 cars of Suzuki Cultus and Wagon R were sold, higher 13.5 percent against 23,642 units sold in the first half of FY18.

However, sales of 800cc cars dropped by 23.7 percent to 24,957 units from 32,703 units, with significant declines noted in the sales of Mehran at 16,826 units from 22,219 units.

This is the first time in 12 years (since December 2005) that sales have increased in December on a month on month basis. This brings total auto sales, including passenger cars, in the first half of the current fiscal year to 120,066 units, down by 3.0 percent year on year. This is the first time in five years that sales have declined during the first half of a fiscal year since the same half in FY13.

Syed Daniyal Adil, analyst at Topline Securities, said despite seemingly better numbers in December 2018, they continued to expect significant slowdown in auto sales given the deteriorating economy, law barring tax non-filers from purchasing cars, and multiple price hikes in the past 12 months.

The month on month increase in sales was contrary to historical trend where sales fall in the month of December due to seasonal factors. This increase was primarily due to higher sales in Pak Suzuki Motors Company (up 38 percent month on month).

Indus Motors recorded robust year on year growth of 16 percent led by 84 percent year on year and 10 percent year on year increase in Hilux and Corolla sales, respectively. On the other hand, Fortuner sales declined by 33 percent year on year to 153 units from 230 units.

Honda sales fell by 26 percent year on year and 31 percent month on month, while sales for the first half of FY19 fell by 2.0 percent year on year.

The fall in sales in December 2018 was led by 50 percent lower BR-V sales and 19 percent lower sales of City and Civic units’ year on year.

Honda had been showing a robust trend in monthly sales up till October 2018. However, the company started showing slowdown in sales where in the past two months cumulatively, volumetric sales fell by 24 percent year on year.

Sales of BR-V have shown the most declines, as the initial high growth phase of the new car came to an end.

“Although, we expect monthly sales to recover slightly in January, we continue to expect falling volumes year on year. Moreover, it must be noted that the company’s cash and short-term investments have fallen to Rs14.3 billion as of September 2018 compared to Rs31.6 billion in March 2018 due to decline in advances from customers,” Daniyal Adil said.

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