A representational image of new vehicles parked at a showroom. — Reuters/File

High prices massively dent auto sales in July

by Pakistan News
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A representational image of new vehicles parked at a showroom. — Reuters/File
  • Sales of all vehicles, including passenger cars, drop in July.
  • Analyst cite high auto prices, waning affordability as major reasons.
  • Car sales clock in at around 14,000 units, down 59% month-on-month.

KARACHI: Owing to extravagant auto prices, high-interest rates, and waning affordability, passenger car sales plunged by 50% to 10,377 units in July compared to 20,669 units in the same month last year, The News reported, citing monthly data.

Data released by Pakistan Automotive Manufacturers Association (PAMA) showed that the sales of all vehicles including passenger cars, trucks, jeeps, pick-ups, tractors, and two-wheelers as well as three-wheelers dropped during the period under review.

Topline Securities auto analysts said car sales including those of non-PAMA members clocked in at around 14,000 units, down 59% month-on-month, primarily because of production issues, higher car prices, the low purchasing power of consumers, and fewer working days due to Eid-ul-Adha holidays.

On a yearly basis the sales slumped 52%, the analysts added.

During the month under review, sales of 1,300cc and above cars were recorded at 4,463 units, down 39%, 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 1,000cc 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.

Meanwhile, sales of buses and trucks saw a decrease to 379 units during the first month of the fiscal year 2022-23 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.

Demand likely to remain under pressure in FY23

JS Research Analyst Wasil Zaman 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,” he said, adding auto demand is likely to remain under pressure during the fiscal year 2022-23 (expected to drop 25% 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% 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% in July, while month-on-month sales of all of its variants fell in the range of 57-95% 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% to 2,537 units in July 2022 as sales of Civic and City models decreased 30% month-on-month.

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