Auto sales are coming close to the peak numbers from last year, driven mostly by the sheer success of commercial vehicles and tractors ,while passenger car sales are still recovering from the steep drop in sales once the taxi-scheme wrapped up last fiscal year. Total auto sales excluding two and three-wheelers stood at 149,448 units in 7MFY17 against 151,410 units in 7MFY16, dropping by 1.3 percent. (Read half yearly numbers: Autos: Tepid half-year; but don't despair published Jan 12, 2017).
There is no doubt though, January marks an excellent start to the year itself and could help write a turnaround story for the sector. Expectedly, Pak Suzuki Motor Company (PSMC) sales overall declined by 24 percent in 7MFY17 year-on-year due to drops in Ravi and Bolan sales, 51 percent and 48 percent respectively. However, sales for both rose between December and Januaryby 37 percent and 20 percent respectively.
Meanwhile, WagonR is finding popularity, growing by 77 percent in 7MFY17 year-on-year and by 16 percent in January month-on-month. Sales for Mehran also fell selling about 2,000 vehicles more on average during the period July to Jan last year compared to now.
PSMC announced that it would stop taking orders for Suzuki Cultus from Feb 01, so we will see substantial decrease in sales going forward until the new replacement vehicle starts getting manufactured for which we do not have a specific timeline as yet. The company also recently launched a sedan; Suzuki Ciaz in competition with Honda City and base model Corolla, which for now is being imported in CBU form but after gauging market interest the company might start producing it locally.
Indus Motor Company (INDU)s flagship variant and consumer favorite Toyota Corolla saw a drop of 7 percent in 7MFY17, though January saw a 23 percent leap in month-on-month sales, selling about 1,000 units more since Dec. The market has also been receptive to the new Hilux and the new Fortuner models. Fortuner sales jumped from 18 units to 126 units between Dec and Jan.
The smaller but the real growth story is written by Honda Atlas Cars (HCAR) that recently announced it would be operating on a double shift basis to catch up with growing demand for both City and Civic. The 10th generation Civic had pushed up consumer expectations while there will soon be a new City model in the market. Honda has its hands full. Combined sales rose by 51 percent in 7MFY17 year-on-year and nearly doubled between Dec-16 and Jan-17. The January sales of 4,002 units are the highest the company has sold in a month to date.
The show stoppers are tractors that jumped by nearly 80 percent. Greater sales can be contributed to lower sales tax that has reduced the retail price. Improved agriculture yield and continuation of fertilizer subsidy are also contributing to greater tractor sales. Tractor exports demand is also rising.
As predicted by this column, trucks and buses will continue to find a burgeoning market. Hino trucks sales rose by 26 percent, Nissan by 20 percent, Master Motors by 56 percent, while Ghandharas Isuzu doubled its sales in 7MFY17 year-on-year. Monthly average has gone from 460 units during 7MFY16 to nearly 700 units during 7MFY17.
Other trucking brands in the market including FAW, Sino are also known to be selling more average units. In anticipation of the demand, many of the new brands are also expanding. FAW recently entered into an agreement to bring Hyundai trucks to the Pakistani market; while Dewan Motors is scheduled to bring Shahzore trucks.
This column has at length discussed the new investments in the car segment that are in the pipeline; from French automakers to Korean carmakers, Pakistan is expected to see it all. Greater competition and variety of locally produced models would give a much-needed boost to the industry, not to mention create thousands of new jobs (Read our detailed story- Auto sector: Chasing cars, published on Feb 8, 2017).
We hope to get more details about some of these investments in the coming weeks. Meanwhile, the existing players cannot be underestimated either and while PSMC is the only one that has announced substantial expansions, the other two are introducing new models and facelifts every now and then. Will that alone be enough, it remains to be seen. The picture as it stands now is one of optimism and the stock market echoes that optimism with a strong rally of most auto stocks. Even more so, January sales numbers project a rosy beginning to the year.
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