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Auto sales jump 22 percent in Jan to post biggest monthly increase

February 13, 2018 12:00 AM
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Auto sales jump 22 percent in Jan to post biggest monthly increase

KARACHI: Sales of passenger cars posted their biggest ever monthly increase in January, as soft loans and a robust economy offset the impact of price increases due to recent rupee devaluation, analyst and industry officials said on Monday.

Sales of passenger cars increased 22 percent to 23,562 units in January 2018 compared to 20,884 units sold in the same month last year, industry data showed. “It’s all time high car sales (in January 2018),” said Mohammad Sohail, CEO at Topline Securities. “Start of the year is generally a robust period for auto sales.”

Car sales stood at 147,700 units in the first seven months of the current fiscal year 2017/18 as compared to 118,416 units in the same period of last fiscal year, Pakistan Automotive Manufacturers Association (PAMA) said.

Analysts attributed record sales to a change in import procedure, demand from online ride hailing services and availability of auto finance at lower rates.

According to PAMA, sales of trucks and buses in December 2017 remained strong, growing 21 percent YoY, while they grew by 18 percent in the seven months of FY18. Tractor sales continued to exhibit upward trajectory with sales growing nine percent YoY in January 2018. During the July-January period in 2017/18, tractor sales went up 45 percent YoY to 38,173 units.

Al-Ghazi Tractors outperformed in the sector with its 53 percent YoY growth, selling 2,715 units in January 2018. Millat Tractor sales on the other hand fell 12 percent YoY to 3,109 units. Orient declined 47 percent to 39 units.

Analysts expect lower GST on tractor purchase, fertiliser cash subsidy, along with Rs2 billion subsidy for farmers on tractor purchase announced in the current year's provincial budget by the Sindh provincial budget to support overall sales.

Motorcycle/three-wheeler sales for December 2017 grew nine percent YoY, whereas seven month sales in FY18 went up 19 percent due to rising disposable income of the lower middle class, PAMA said.

Analysts foresee these trends to continue, fuelled by China-Pakistan Economic Corridor (CPEC), higher road connectivity, low financing rate, robust growth in large scale manufacturing sector and change and enforcement of axle-load limit per truck on highways.

Company-wise data released by the manufacturers association revealed that the Suzuki led the automakers, registering a YoY increase of 24 percent to 13,793 units. Suzuki’s below 1,000cc category, including Wagon-R and Mehran sold 2,703 and 4,324 units, respectively.

“We believe Pak Suzuki continues to be a major beneficiary, as majority of used car imports fall under lower engine (less than 1000cc) capacity segment,” said analyst Rai Omar Basharat at Topline Securities.

Honda cars, up 10 percent to 4,388 units, thrived off the new BR-V at 500 units. Honda volumes increased by 37 percent month-on-month, as in December 2017, sales were extremely low owing to plant overhauling and maintenance.

“We expect improved volumes in coming months as current delivery periods stand at five to seven months depicting strong demand for its (Honda) models,” said analyst Hamdan Altaf at Taurus Securities.

Toyota’s Indus Motors lagged behind in the sector, with YoY decrease of seven percent, and MoM increase of 18 percent, selling 5,381 vehicles. Corolla volumes went down 17 percent YoY.

Analysts foresee introduction of new players in the industry (Kia, Hyundai, Renault, Ssangyong, Volkswagen etc); current players launching new models and facelifts, and growing construction activities to contribute towards growth in volumes of all auto segments in the days to come.

Source: thenews.com.pk

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