Booming car sales

The first quarter of FY16 is behind us and the sales tallies reported by the major manufacturers in the domestic market shows little change from the trends that have set in over the past few months.

Pakistan Suzuki Motor Company appears poised for a stellar year. Thanks to the governments schemes; its Bolan vehicles are cruising out of dealerships. The company has sold almost 10,000 units in the first quarter alone. The Wagon R has seemingly carved out its own market share and the company other variants are all displaying higher sales, as compared to the same period of the previous year.

Indus Motor Company continues to shine. Its flagship product the Corolla, has trumped the already impressive sales from 1QFY15, with a jump of 58 percent in the first three months of FY16.

And just as has been reported for the past many months, Honda Atlas Cars (HCAR) continues to struggle to regain its past preference among buyers. While the Honda City has fared well, it is the Honda Civic; a long time favourite among domestic car buyers, which has fallen from grace.

In our review of monthly auto sales, last month, BR Research had noted that "Whatever gains it managed from City sales, were negated by lower demand for Civic". This month, the company opted to not even disclose the number of Civics sold. Instead it has reported the sales of City and Civic, collectively. Repeated requests for variant-specific sales information have gone unfulfilled from the company representatives.

Honda Atlas Cars (HCAR) is expected to launch a new model of the Civic, next year. The company had earlier announced that the next generation will be introduced at the same price as its predecessor. Recently, it has stepped up efforts to push remaining stocks of Civic through a couple of new trifles.

Similar to the period before the launch of the current model of the Civic; the company has introduced chrome door handles and a re-designed grill. Unlike the last time, the price of the car has not been lowered in the months preceding the launch of the newer generation variant.

It remains to be seen whether the new model can revive the Civic in the domestic market. However, it may be argued that the company should make urgent efforts to woo car buyers by expanding its product portfolio in the country.

Low international prices of commodities and favourable foreign exchange rates have beefed up margins for the domestic auto sector in recent times. However, this bonanza cannot be expected to last forever. If HCAR is to emerge strongly from this relatively cushy business period, it will have to steer the interest of car buyers back towards its offerings. Clearly, this feat will not be accomplished riding on the current generation Honda Civic.