Pakistan car sales drop 3% MoM in March

Pakistan car sales in March totaled 9,379 units, reflecting 3% decrease compared to the previous month and 1% decline compared to the same period last year, as reported by the Pakistan Automotive Manufacturers Association (PAMA).

Higher auto prices, record high interest rates, and a limited availability of auto financing, coupled with an overall decrease in purchasing power, all contributed to the lackluster performance in the segment, according to Usama Rauf, auto sector analyst at AKD Securities.

The surge in imports of used cars following the removal of the regulatory duty last year also had a significant impact on local original equipment manufacturer sales, he said.

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In March, Honda Atlas Cars (HCAR) experienced significant growth, with sales increasing by 44% month-on-month (MoM) and 162% year-on-year (YoY) to 2,188 units.

“This growth can be attributed to the low base effect, as the company had shut down its plant during the same period last year,” wrote Topline Research analyst Sunny Kumar in his report on Wednesday.

On the other hand, Pak Suzuki (PSMC) and Indus Motors (INDU) both saw a 16% MoM decline in car sales in March 2024. Hyundai Nishat Motor recorded sales of 582 units, down 30% YoY but up 3% MoM.

Cumulatively, PAMA car sales for the first nine months of fiscal year 2024 (9MFY24) amounted to 69,078 units, marking a 38% YoY decrease compared to 110,898 units in the same period of the previous fiscal year.

The decline can be attributed to escalating car prices, expensive auto financing, and the low purchasing power of consumers.

“Looking ahead, it is anticipated that an improvement in economic activity following the International Monetary Fund’s (IMF) new programme, a stable currency, and reductions in interest rates will lead to an improvement in car sales,” Kumar wrote.

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In the motorcycle segment, sales were up 10% YoY but down 1% MoM to 93,016 units in March 2024. Atlas Honda (ATLH) recorded sales of 80,000 units, up 12% YoY but down 2% MoM. Total industry sales for the first nine months of fiscal year 2024 (9MFY24) amounted to 833,000 units, down 10% due to higher bike prices and the low purchasing power of consumers.

In the tractor segment, Millat Tractors (MTL) recorded sales of 3,027 units, up 40% MoM, followed by Al Ghazi Tractors (AGTL) with sales of 1,581 units, up 31% MoM in March 2024. Total industry sales for 9MFY24 amounted to 35,199 units, up 66% YoY due to a low base effect from the previous year amid floods.

Tractor sales experienced a significant increase that was driven by farmers purchasing machines ahead of the Rabi harvesting season, Usama Rauf said.

He said the annual increase in tractor sales could be attributed to the low base of the previous year, as the effects of the 2022 floods on Rabi crops had diminished farmers’ purchasing power during the same period, thus affecting tractor sales.

Trucks and buses sales were down 12% MoM but up 1% YoY to 311 units in March 2024, bringing 9MFY24 industry sales to 1,888 units, down 44% YoY.

The article, originally published on April 17, 2024, was updated on April 18, 2024 to correct the name of an analyst.