The sales figures released by Pakistan Automotive Manufacturers Association (PAMA) for October display business-as-usual for auto assemblers. Unfortunately, over the years business-as-usual in the auto industry has come to mean under performance.
For the 4M FY14, sale of passenger cars grew by nearly nine percent, compared to the corresponding period of the previous year. Growth is never bad, except that this growth came on the back of low-base effect from last year.
The influx of used cars during CY12 had severely battered new car sales for local assemblers, as sales for 4M FY13 dropped by 32 percent on year-on-year basis. The 2,000 or so additional cars sold in the four-month period are a welcome respite, but still far off from 52,000 cars sold in the peak four-month period of FY12.
A year-on-year analysis shows a remarkable performance by Honda, with Civic and City sales growing by 52 and 22 percent, respectively. But all is not well for Honda; the company launched its new Civic in September last year, with sales peaking in 2H FY13. Total Civic and City sales topped out in May when the company sold a total of 2,392 units after the launch of City Aspire in April. Honda sales have since gradually declined, with a new low reached in October with 1,720 units indicating a lull in buyers craze for new models.
Sales for other assemblers also remain modest, with Corolla sales growing by approximately 200 units for the four-month period, recording just two percent growth. The numbers are expected to remain stagnant primarily due to buyer anticipation of the new Corolla model and the setting in of the calendar year end--the weakest period for car sales historically, due to buyer preference for cars with New Year registration.
Within the 1,300 segment, Swift brought no happy tale for PakSuzuki, as sales declined not only on a month-on-month basis, but also compared to the previous year. A welcome sign, however, was a re-entry of Liana sedan in production with 72 units produced and 61 units sold during the month, highest ever since July CY11.
Cultus remained Suzukis tried and trusted model in the economy segment, with nearly hundred additional units sold compared to the 4M FY12. Mehran sales, however, were unimpressive and stagnant at 9,000 units; registering a dip of three percent.
BR Research has time and again lamented the flat lined sales in the auto sector, and this months numbers do not reveal any significant change in those trends. A new Auto Industry Development Policy is in the offing, dubbed AIDP-II, hinting (as if) the auto industry is in its second phase of development. But the truth is the industry is yet to recover its pre-FY08 levels, let alone achieve the scale required to become competitive.
However, it should also be noted that while some players have outperformed the rest at different points, these respite have only lasted for very brief periods. On most occasions, they have indicated buyer craze for a new model, than a result of a significant design-innovation. Such demand mainly stems from the luxury car buying segment, and dies down as the craze subsides.
The lack of sustained demand over time for these cars shows that the demand fails to trickles down (if prices were to drop as models grow older). On the other hand, lack of innovation (or choices!) in the economy and small car segment also show the disinterest of manufacturers in serving the lower segment.
While the auto industry has demanded protection against imported used cars in the new auto policy, the industry needs to achieve scale in order to become sustainable. A paradigm shift in the industrys orientation is thus required if it expects accommodation from the government.
Comments
Comments are closed.