Auto sales in Pakistan increased 15% year-on-year (YoY) in August 2024, as the total number of units sold in the said month stood 8,699, compared to 7,579 units in the same month of the previous year.
On month-on-month (MoM) basis, auto sales (cars, LCVs, vans, jeeps) rose 1% in August against 8,589 units sold in July 2024, according to the latest data released by the Pakistan Automotive Manufacturers Association on Tuesday.
“The YoY jump in overall auto sales can be attributed to a low base effect, as the industry faced significant challenges in the previous year,” Muhammad Abrar Polani, research analyst at AHL Research, said.
“These challenges included restrictions on opening LCs [letters of credit] and subdued auto demand, leading to widespread plant shutdowns,” Polani added.
Car sales down 36% MoM in July over budgetary measures
The 1,300cc and above category recorded a strong MoM growth of 35%, with sales reaching 3,330 units in August.
The 1,000cc segment also performed well, showing a 37% MoM increase with 321 units sold.
However, the below-1,000cc category experienced a 12% decline, with sales dropping to 2,766 units, indicating consumer preference shifting towards higher-capacity vehicles.
Industry experts suggest future growth in the automotive sector will depend on a combination of policy support and macroeconomic stability.
“Potential monetary easing, along with stable car prices bolstered by a strong currency, could enhance auto financing and drive growth in the automotive sector,” said Osama Naeem, auto sector analyst at AKD Research.
However, seasoned analyst Mashood Khan emphasised that a significant recovery would not be possible without interest rates dropping to single digits.
“The auto sector cannot be fully revived unless interest rates drop to single digits, which is challenging under the current economic conditions,” he said.
In July, the central bank’s Monetary Policy Committee (MPC) reduced the key policy rate by 100bps, taking it to 19.5%.
The next MPC meeting is due on September 12 as analysts expect the State Bank to continue with its easing stance as slower inflation and improved macroeconomic indicators boost sentiment of a third-successive reduction.
Khan also pointed to a shift in consumer preference toward two-wheelers as a sign of the industry’s struggle.
“The government needs to support the four-wheeler segment with positive policies. Even if the policy rate drops to 17%, down by two percentage points from 19%, it won’t be enough to boost four-wheeler sales,” he said.
In the two-wheeler segment, sales rose 23% MoM, with Atlas Honda (ATLH) leading the charge, selling 90,483 units—a 29% increase from July.
Among the automakers, Indus Motors Company Ltd (INDU) stood out with a 28% MoM increase in its sales, totaling 2,129 units in August.
This growth was fueled by a 42% MoM increase in sales of its popular models like the Corolla, Yaris, and Corolla Cross. Sales of the Fortuner and Hilux models also rose by 1%.
Meanwhile, Pak Suzuki Motor Company (PSMC) struggled in August, posting an 18% MoM decline with total sales of 3,653 units.
The decline came from the Ravi model, which plummeted by 99% MoM, and Alto, which saw a 29% MoM drop.
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However, the company’s Swift, Cultus, and Wagon R models recorded MoM gains of 11%, 36%, and 37%, respectively. Bolan sales spiked by 158% MoM, helping offset some of the overall decline.
Honda Atlas Cars (HCAR) reported a 23% MoM increase, with Civic and City sales up by 36%. However, sales of the BRV and HRV models fell by 47%.
Sazgar Engineering Works (SAZEW) also posted a 14% MoM increase, largely driven by a 15% MoM rise in sales of its Haval vehicles.
Tractor sales also saw an impressive MoM growth of 83%, despite a 33% YoY decline. AGTL recorded a 70% MoM increase with 1,452 units sold, while MTL posted a 101% MoM rise, reaching 1,218 units.
The decline in tractor sales over the past year was attributed to higher prices, the imposition of a 10% sales tax, and reduced agricultural activity due to a poor cotton crop.
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