-
-
Passenger car sales in Pakistan have experienced a staggering decline of 85% year-on-year, primarily attributed to non-production days, extended Eid ul Fitr holidays, and a decrease in purchasing power, as reported by The News on Friday.
Data released by the Pakistan Automotive Manufacturers Association (PAMA) revealed that sales of passenger cars dwindled to a mere 2,844 units, a sharp drop from the 18,626 units sold in April 2022.
Cumulatively, during the first 10 months of the fiscal year 2022-23 (10MFY23), a total of 88,620 units were sold, reflecting a 54% decrease compared to the 191,238 units sold during the same period in the fiscal year 2021-22.
Arif Habib Limited, a prominent financial institution, attributed this decline in sales to a shrinking demand caused by significant increases in interest rates, skyrocketing automobile prices, repeated plant shutdowns, surging petroleum prices, and reduced consumer affordability.
Analyzing the monthly data, sales in April remained significantly lower by 60.5% compared to the 7,201 units sold in March. Notably, sales of cars with engine capacities of 1300cc and above recorded only 1,585 units, witnessing a substantial 83% decline compared to the same month’s sales of 9,189 units in the previous year.
In April, the sales of 1,000cc cars reached a mere 276 units, with Suzuki Cultus accounting for 177 units and Suzuki WagonR accounting for 99 units, a significant drop from the 3,568 units sold in the same month last year.
Moreover, the sales of vehicles below 1,000cc amounted to 983 units, marking an 83% decrease compared to the 5,869 units sold last year. Suzuki’s new Alto, a popular model, sold 820 units in April 2023, in contrast to the 5,009 units sold in April 2022.
The sales of buses and trucks experienced a sharp decline from 472 units in April last year to 152 units in April 2023. Similarly, the sale of jeeps and pick-ups decreased from 3,917 units to 1,619 units during the same period.
Sales of tractors also suffered, dropping to 3,211 units from 4,848 units in April 2022. However, it remained higher compared to the 2,984 units sold in March. Additionally, the sale of rickshaws and motorbikes witnessed a decline to 82,136 units in April 2023, a notable decrease from the 151,705 units sold in the same period last year.
Sunny Kumar, an analyst at Topline Securities, highlighted that April’s auto sales hit the lowest monthly figures since May 2020 when a lockdown was imposed to curb the spread of COVID-19. Non-PAMA members’ car sales also experienced a significant decline of 47% month-on-month.
Kumar emphasized that this monthly decline can primarily be attributed to the seasonal slowdown during the month of Ramadan, reduced working days due to the extended Eid holidays, and the challenges faced with the availability of completely-knocked down (CKD) parts, particularly regarding issues related to letters of credit.
The overall decline in sales during the 10MFY23 period can be attributed
to various factors, including the non-availability of CKDs, escalating car prices, expensive auto financing, and the low purchasing power of consumers.
Taking a closer look at individual companies, Honda Atlas Car (HCAR) experienced the highest decline, with a staggering 75% drop in sales to 207 units in April. This decline was primarily driven by a significant decrease in sales of City and Civic models, which plummeted by 74% compared to the previous month.
Similarly, Pak Suzuki also faced a substantial decline of 74% in monthly sales, recording only 1,474 units. The reasons behind this decline align with the broader challenges faced by the automotive industry.
Furthermore, the data revealed a consecutive nine-month decline in auto financing, with the March figures showing a 12.83% year-on-year decrease, amounting to Rs317 billion. Arif Habib Limited pointed out that auto financing, which used to play a significant role, accounting for 30% to 40% of total auto sales, has now dropped to zero.
The declining sales in the passenger car segment indicate the immense impact of non-production days, extended Eid ul Fitr holidays, and the deteriorating purchasing power of consumers. These challenges, coupled with factors such as rising interest rates, surging automobile prices, plant shutdowns, escalating petroleum costs, and reduced affordability, have contributed to the sharp decline in car sales across Pakistan.
As the industry faces these obstacles, stakeholders and market participants will closely monitor the situation, seeking ways to revive the automotive market and stimulate demand while addressing the underlying issues affecting the industry’s performance.
