Car sales in Pakistan saw a significant month-on-month (MoM) drop in July 2024, plummeting by 36% to 8,589 units, according to the Pakistan Automotive Manufacturers Association (PAMA).
The decline in car sales follows a surge in pre-buying activity in June 2024, spurred by fears of increased taxation in the FY25 budget.
On year-on-year (YoY) basis, sales were up 60% in July, largely due to the low base effect from last year when industry operations were disrupted by inventory shortages.
However, the MoM decline in July’s car sales can also be attributed to the higher tax rates introduced in the FY25 budget for vehicles, particularly the increase in withholding tax (WHT).
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Anticipating the hike, consumers rushed to purchase vehicles in June, pushing sales to an 18-month high.
Among the automakers, Hyundai Nishat Motor witnessed the steepest decline in July, with sales falling 50% MoM to 529 units, marking a 7% YoY drop.
Indus Motor Company (INDU) also experienced a sharp decline, with sales decreasing by 44% MoM to 1,664 units.
Honda Atlas Cars (HCAR) reported a 15% MoM drop in sales to 931 units, while Sazgar Engineering (SAZEW) saw a marginal 5% MoM decrease, selling 825 units.
The YoY increase in car sales was attributed to the low base effect from last year when plant closures due to inventory shortages severely impacted the industry, according to a Topline Research report.
In the motorcycle segment, sales of two- and three-wheelers in Pakistan fell by 5% MoM to 84,993 units but increased by 15% YoY. Atlas Honda (ATLH), a dominant player in the segment, recorded sales of 70,300 units, reflecting a 12% MoM decline but a 13% YoY increase.
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The tractor segment, however, saw a sharp decline, with sales dropping 63% YoY and 78% MoM for Millat Tractors (MTL), which sold 605 units in July. Al Ghazi Tractors (AGTL) also faced a downturn, with sales decreasing by 16% YoY and 40% MoM to 855 units.
Overall, the tractor industry saw a 45% YoY and 65% MoM decline in sales, totaling 1,460 units in July 2024.
This decline can also be attributed to pre-buying in June, driven by the government’s imposition of a 10% General Sales Tax (GST) on tractor sales, Topline said.
Truck and bus sales were the only bright spot, rising 3% MoM and 57% YoY, with 307 units sold in July 2024.
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