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December 11, 2019

Car sales plunge 44 percent in November

Business

December 11, 2019

KARACHI: Car sales plunged 44 percent year-on-year to 8,524 units in November as increased prices and exorbitant auto financing dampened the consumer buying sentiments, analysts said on Tuesday.

Pakistan Automotive Manufactures Association’s (Pama) data showed that car sales dropped from 15,334 units sold in the corresponding month a year earlier.

Car sales sharply fell 45 percent to 49,110 units in the five months of the current fiscal year of 2019/20. Total 87,897 cars were sold during the corresponding period a year earlier.

“Pakistan’s car sales continued to trend down,” Hammad Akram, analyst at Topline Research said. “This decline is primarily attributable to higher auto prices post rupee devaluation and higher interest rates for auto financing.”

While rupee showed an uptrend against the US dollar, it continued to lose its value in the recent past, increasing cost of production for the import-reliant auto industry.

Cost of borrowing continued to increase due to higher interest rates. The central bank kept the benchmark interest rate multiyear high to fight off inflationary pressure.

“We expect recovery in car volumes from start of 2020 as auto volumes will likely bottom out in December 2019,” Akram added.

In November, sales of 1300CC and above car dropped 59 percent to 3,430 units only compared with 8,426 units sold during the same month in the previous year.

Sale of Toyota Corolla decreased 56 percent to 2,172 units last month as against 4,957 units sold in November 2018.

Combined sales of Honda Civic and City were down 66 percent to 1,074 cars in November 2019 from 3,353 units compared to the same month last year. Suzuki Swift’s sales declined 42 percent year-on-year to 184.

In November, production of Civic/City, Corolla and Suzuki Swift was cut down 86 percent, 66 percent and 76 percent, respectively.

In November, 1,000 CC cars – Suzuki Cultus and Suzuki WagonR – witnessed drop in sales by 57 percent to 1,555 units as against 3,658 units in the same month last year. Pak Suzuki Motors cut production of both the cars by 82 percent during the month.

Under 800CC cars, sales remained encouraging only because of Suzuki Alto, whose 2,967 units were in the November and 19,958 in the first five months.

Suzuki Mehran saw a decline of 94 percent in sales to 128 units in November compared with 3,239 units a year earlier. Pak Suzuki decided to discontinue production of its popular economic car last year.

Analysts said purchasing power of the customers decreased after an increase in car prices. Besides, sales were usually down at the ending months of a year, they added.

Pama data further showed that sale of buses and trucks dropped to 383 units in November from 683 units during the corresponding month last year. Sales of jeeps decreased to 568 units from 1,286 units.

Toyota Fortuner’s sales dropped more than 50 percent to only 109 units in November 2019 compared to 236 units in November 2018.

Sales of tractors decreased to 1,818 units from 3,750 units during the corresponding period last year.

Sales of three wheelers (rickshaws) and motor bikes slightly increased to 144,029 units from 141,770 units last year.

With exception to Suzuki’s new Alto and bikes, almost all variants of four wheelers and above vehicles recorded a decline in sales.