Automobile sales in Pakistan fell 38% in December 2022 to 16,811 units on a year-on-year basis, according to the data released by Pakistan Automotive Manufacturers Association (PAMA) on Wednesday.
The decrease was driven by restrictions on import of completely knocked down (CKD) units and problems pertaining to opening of letters of credit (LCs).
Experts foresee car sales to drop 40-50% in fiscal year 2023.
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“Increasing car prices, expensive auto financing, low purchasing power of consumers, non-availability of CKD parts amid LC issues leading to non-production days and year-end phenomenon (in December) are the reasons for drop in sales,” said Sunny Kumar, research analyst at Topline Securities.
Several rounds of price increases and weak demand have also seen sales volumes drop by 38% for the first half of fiscal year 2023. Kumar also projected sales to fall 50% in fiscal year 2023.
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Meanwhile, Foundation Securities research analyst Mohammad Awais Ashraf saw a drop of around 40% over the same period.
“Sales are expected to remain low due to difficulties in opening of LCs for auto manufacturers and lower demand on the back of elevated interest rates and higher car prices. Moreover, tightening of financing criteria by the central bank will also act negative for auto sales,” Ashraf said.
On a month-on-month basis
On a month-on-month basis, Indus Motor Company reported a decline of 13% to 2,823 units in December 2022, led primarily by non-production days.
Honda reported an increase of 5% to 2,079 units in December while Hyundai’s sales went up by 37% with Tuscon’s bookings rising by 67% and Elantra by 41%.
Pak Suzuki reported a decline of 8% in its sales to 11,342 units.
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In the tractors segment, Millat Tractors (MTL) recorded a decline of 55% on a month-on-month basis to just 501 units in December 2022 primarily due to plant closure. However, Al Ghazi Tractors (AGTL) recorded a fourfold increase in its sales to 514 units.
This takes total sales of the tractor industry to 11,513 units in the first half of fiscal year 2022-23 —down 57% year-on-year due to floods, plants shutdowns, lower consumer buying power and higher prices.
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Motorcycle sales were also down 6% on monthly basis and 27% year-on-year in December. Atlas Honda recorded sales of 85,000 units, down 8% month-on-month and 26% year-on-year.
Trucks and buses sales were down 16% month-on-month and 15% year-on-year to 286 units in December. This takes sales in the first half of fiscal year 2022-23 to 1,947 units – down 36% year-on-year primarily due to drop in transportation activity and slowdown in overall economy.
Meanwhile, research analyst at JS Global Wasil Zaman said that the calendar year 2022 saw a decline of 5% in car sales.
Zaman said sales in 2021 increased after tax and duty incentives in the budget. The phenomenon continued till the first half of CY2022 before restrictions on imports and increase in prices began to impact them.