Pak Suzuki, Honda, and Toyota – Japan’s major auto companies – often attributed as the “Big Three” are expected to report a cumulative volume of 87,612 units in Pakistan for financial year 2023-24, a staggering 23% year-over-year decline and a 21-year low, according to a JS Research report issued on Tuesday.
The significant drop was attributed to suppressed demand due to lower consumer purchasing power, increased influx of used imported cars, and higher car prices resulting from currency depreciation and taxes levied on auto manufacturers.
In the financial year 2022-23, the Big Three sold a total of 113,346 units, the report said.
Pakistan car sales drop 3% MoM in March
The decline in the sales volume is a stark reminder of the challenges facing the automotive industry, including rising inflation, currency fluctuations, and shifting consumer preferences.
The 21-year low is a significant setback for the industry that has experienced steady growth in recent years.
However, the three companies are expected to witness nearly a two-fold increase in the sales volume for June 2024, reaching 10.14K units, compared to the same period last year.
The surge in June’s sales was attributed in the report to a lower base due to plant shutdowns at Indus Motor Company Limited (INDU), the manufacturer of Toyota cars in Pakistan, and Pak Suzuki Motor Company (PSMC) last year.
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On a month-on-month basis, a marginal increase of 10% is expected in the Big-3 sales for June, led by a significant recovery of 44% expected by INDU.
“The trajectory of volumes going forward can continue with a slow momentum,” said Wadee Zaman, JS Research’s auto analyst.
“While the FY25 budget offered some incentives, like extending concessionary GST for Hybrids (HEVs) until FY26, the increase in advance tax on local cars and lack of regulatory duty on lower-priced imported vehicles (below 1,300cc) are likely to dampen the pace of recovery for domestic automakers,” he added.
It may be noted that the sale of Corolla Cross is expected to be around 900 units in June, as more people opted for the hybrid variants amid earlier talks that the government might omit the concessionary GST on hybrids in the budget.
Meanwhile, as per the report, auto loans continued their downward trajectory for the 23rd straight month, clocking in at Rs233 billion, down 23% year-over-year.
However, with the monetary easing cycle beginning last month and further rate cuts expected, sharp interest rate cuts may lead to an uptick in auto-financing in the coming months.