By Moonis Ahmed
Car sales during the first eleven months of FY09 stood at 75,293 units as compared with 149,527 units in the same period last year, showing a substantial decline of 49 percent.
Pakistan Automotive Manufacturing Association (PAMA) released figures for the local auto sales during first eleven months FY09 on Tuesday.
According to the latest figures, cumulative auto sales (Cars + LCVs) have posted a rise of 11 percent month-on-month (MoM) in May 2009. This encouraging performance in the auto sector is largely driven by 29 percent growth by Pak Suzuki (PSMC).
The company which had shown lackluster performance in preceding months benefited from its decision of cutting unit prices as sales growth was witnessed along all major product lines. This improved auto performance was however confined to PSMC as all the other major players recorded negative MoM growth.
Despite encouraging performance on a MoM, auto sales continued with their negative trend on a year-on-year basis, as auto sales were down 47 percent YoY for the period 11MFY09 while car sales fell by 49 percent. Major contributors in this decline are Dewan Motor (down 73 percent YoY) and Pak Suzuki (down 55 percent YoY). “High car prices, liquidity issues and high rates of car financing are the key issues behind the decline in sales over 11MFY09”, an analyst said.
“It is expected that, 200 bps reduction in discount rate, elimination of 5 percent federal excise duty (FED) and possible cutback on with-holding tax (WHT) in the upcoming budget will likely boost auto sales going forward”, he added.
The global economic recession had put negative impact on almost all sectors of economy and automobile sector was one of them showing continuous decline in its sales, he said.
Light Commercial Vehicles (LCVs) including Jeeps and Pick-Ups recorded a gloomy picture, as it stood at 14,915 units during Jul-May 2008-09 as compared with 20,302 in the same period of last year, showing a decline of 26 percent.
“Although, the current fiscal year has been Annus horribilis for the auto industry but the industry is expected to revive in beginning of FY10 and there could be some cushions in the coming budget for the industry”, he said.
Increase in cost along with political and economic instability and increase in car prices also affected the sales, analyst said.
Toyota Corolla sales dipped by 21 percent in the said period to 23,721 units as compared with 30,200 units in same period of last year and its production also declined to 24,032 units as compared with 30,521 units during same period of last year. This contributed towards scaling down industry car sales due to relatively high weight of Corolla in car sales segment.
The PAMA statistics showed that 1,000cc cars sale dwindled most by 66 percent to 14,683 units as compared with 43,560 last year, while 1,300cc and above dropped by 23 percent to 34,764 units, as against to 45,551 units last year. PAMA figures reveal that less than 1,000 cc cars sale plummeted by 57 percent to 25,846 units as compared with 60,416 units.