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Wednesday February 01, 2023

Auto sales plunge 50pc in July as prices go north

August 13, 2022

KARACHI: Passenger car sales crashed 50 percent in July compared to the same month last year, chiefly owing to extravagant auto prices, high interest rates, and waning affordability, data showed on Friday.

Sales of all vehicles including passenger cars, trucks, jeeps, pick-ups, tractors, and two-wheelers as well as three-wheelers dropped during this period.

Data released by Pakistan Automotive Manufacturers Association (PAMA) showed that the sales of passenger cars decreased to 10,377 units in July 22 from 20,669 in the same month last year.

Auto analysts at Topline Securities said car sales including those of non-PAMA members clocked in at around 14,000 units, down 59 percent month-on-month, primarily because of production issues, higher car prices, low purchasing power of consumers, and less working days due to Eid-ul-Azha holidays. Year-on-year, the sales slumped 52 percent, the Topline analysts added.

During the month under review, sales of 1300 cc and above card were recorded at 4,463 units, down 39 percent, compared to 7,265 units sold in the same period last year.

It included 2,408 units of Honda Civic and City, 321 units of Suzuki Swift, and 1,734 units of Toyota Corolla and Toyota Yaris. There were no reports of any sales of Hyundai’s Elantra and Sonata, while results for BAIC D20 are awaited.

During this period, only 943 units of 1,000 cc cars were sold, which included 661 units of Suzuki Cultus and 282 units of Suzuki WagonR.

Sales of below 1,000 cc category cars reached 4,971 units, including 353 units of Suzuki Bolan and 4,618 units of Suzuki Alto.

Sales of buses and trucks saw a decrease to 379 units during July 2022 from 601 in July 2021.

The sales of jeeps and pick-ups nosedived to 1,506 units from 4,250 units sold during the same period last year, while that of tractors dropped to 2,254 units from 4,332 in July last year.

The sales of rickshaws and motorbikes fell to 96,162 units during July 2022 against 145,197 in the same period last year.

Analyst Wasil Zaman at JS Research said the drop was already expected because of escalating car prices, rising interest rates, and adverse measures taken by regulators. “The month-on-month drop is compounded by aggressive pre-buying witnessed in June 2022,” he said. Auto demand is likely to remain under pressure during “FY2023 (expected to drop 25 percent year on year), while margins for auto assemblers are expected to remain stable in the near term supported by aggressive price hikes announced recently.”

Zaman added that the continued cost pressures could, however, test pricing power and compress margins, while on the flip side, stable currency and decline in commodity prices could provide assemblers with an opportunity to report better margins by retaining the respite on costs.

Manufacturer-wise data showed that Indus Motor Company posted a 62 percent decline in sales month-on-month to 2,375 units, primarily due to non-production days in the month of July.

Pak Suzuki Motor Company sales sagged 58 percent in July, while month-on-month sales of all of its variants fell in the range of 57-95 percent except for Alto, whose sales jumped to 4,618 units from 1,216 in June 2022.

Honda Atlas Cars also recorded a month-on-month drop of 35 percent to 2,537 units in July 2022 as sales of Civic and City models decreased 30 percent month-on-month.

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