KARACHI: Auto assemblers faced a setback as sales of locally produced vehicles fell 13% in February 2019 amid an overall slowdown in economy.
Sale of locally assembled cars in the eight months of current fiscal year declined to 140,462 units from 142,383 units during the same period last year according to data released by the Pakistan Automotive Manufacturers Association (PAMA) on Monday.
The decline is mainly attributable to lower working days in February coupled with persistent declining trend in sales of Suzuki Mehran and Bolan – which contributed big volumes to total auto sales.
Previously, the restriction on purchase of new automobiles by non-filers of tax returns significantly dented sales of the companies. However, in the Finance Supplementary (Second Amendment) Bill 2019, which was endorsed by the National Assembly last week, the government completely withdrew the restriction. It allowed non-filers to buy new vehicles of any engine capacity.
Rising vehicle prices on rupee-dollar parity, soaring petrol and diesel prices and higher interest rates are likely to affect auto sales in the coming months as in a month on month comparison, sales in February dropped to 17,071 units from 19,353 units in January.
During the period under review, in the 1,300cc and above category, total sales clocked in at 70,232 units as against 64,143 last year.
Suzuki Mehran and Bolan sales plunged to 22,460 and 11,385 units from 30,903 and 14,704 taking the total drop in 800cc and below 1,000cc segment to 33,845 in the eight months from 45,607 units in same period last fiscal year.
The last eight months proved a disappointment for light commercial vehicles, vans and jeeps segments. For the first time in eight months, Fortuner sales rose 80% year-on-year, while Corolla continued its growth trend with 23% higher sales. On the other hand, Hilux sales fell 72%, the highest decline in 19 months.
In line with the rising trend, total bus sales soared to 647 in the last eight months from 420 units with Hinopak taking the lead with 305 units versus 179 units.
Truck sales during July-Feb plummeted to 4,289 units from 5,859 units in which Hinopak, Master and Isuzu sales stood at 1,458, 842 and 1,989 as against 2,584, 907 and 2,350 units respectively.
Tractor sales continued its downward trajectory as Fiat and Massey Ferguson sales came down to 11,243 and 20,472 from 17,686 and 26,772 units in 8MFY18.
Despite frequent price rise in two wheelers on the back of falling rupee value against the dollar, sale of Honda, Suzuki and Yamaha surged to 733,918, 15,689 and 16,893 from 729,659, 14,007 and 13,266 units in July-Feb 2017-2018.
Pakistan’s auto sector to struggle: Fitch According to Fitch Solutions, Pakistan’s auto sector is likely to struggle in FY19 and FY20 as the sector’s over-reliance on Chinese investment comes to fruition.
A slowdown in Chinese investment would have a significant impact on heavy commercial vehicles (HCV). Passenger vehicle sales would fare better as the removal of non-income tax filers’ vehicle purchasing restrictions provide some relief and stem some of the pressures coming from the slowdown in investment inflows.
Amid slowing investment, and by extension weakening consumer sentiments, Fitch has revised down its forecast for new vehicle sales in FY19 and FY20 to a 2.4% contraction and 1.3% growth respectively, down from 7.3% and 10.6% growth forecast previously.
Foreign investment in the country, of which 30% comes from China, has decreased by 74.8pc YoY over the first seven months of current fiscal year, says the report. Chinese investment, primarily as part of China-Pakistan Economic Corridor, has slowed down by 28.4% YoY.
The research agency believes that this slowdown in investment would have a detrimental impact on the country’s commercial vehicle segment especially in HCV segment. The report forecasts total commercial sales to grow by only 4.9% in FY19, while light commercial vehicle sales to remain relatively unscathed and expand by 11.8pc while HCV sales to contract by 18.1% over the same period.
The change in government’s policy would only offer marginal support to the demand for passenger vehicle sales as the majority of non-filers remain poor and unable to afford new vehicles, adds the report. New passenger vehicle sales would contract by 3.6% in FY19 and remain stable in FY20, growing only 0.6%, Fitch said.
Toyota raises prices
Indus Motor Company jacked up price of Toyota Corolla 1.8 variants and Fortuner on March 11 owing to 10% federal excise duty on vehicles above 1,700cc.