Pakistan Automobile Industry News and Discussion

[ejaz007]

Passenger car sales plunge 38pc in Dec

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KARACHI: Passenger car sales plunged 38 percent in December for a 9th consecutive month with no sign of an immediate recovery as rising prices and high cost of auto loans pinch buyers, industry data showed on Monday.

Figures released by Pakistan Automotive Manufacturers Association (PAMA) for first half of FY20, showed that the passenger car sales dropped to only 9,987 units in the last month of the previous year from 16,141 units sold during the same period in 2018.

Passenger car sales in the cumulative period (July-Dec) or the first half sank 43 percent to 59,097 units, compared to 104,038 units sold in the corresponding period last year.

With the exception to Suzuki’s new Alto, almost all variants of four-wheelers and above vehicles, recorded a decline in sales. Analysts said increasing prices of cars hurt buyers, denting their purchasing power; besides, sales remained down in the last months of the year.

In December, sales of 1,300 CC and above category cars sank 50 percent to 3,246 units as compared to 6,523 units sold during the same month in the previous year. Sales of Toyota Corolla decreased 50 percent to 2,085 units against 4,179 units sold during December 2018, while that of Honda Civic and City slumped 55 percent to 884 from 1,989, compared to same period last year.

Suzuki Swift also suffered a decline of 28 percent to 277 cars only in the period under review. During this period, sales of 1,000 CC cars i.e., Suzuki Cultus and Suzuki WagonR, plunged 55 percent to 2,125 units against 4,722 units last year. Pak Suzuki Motors cut production of both the cars by 70 percent during the month to 1,191 cars against 3,947 units.

In the 800 CC category, despite strong sales of Suzuki Alto, sales slipped 5 percent to 4,616 units in December against 4,896. However, six-month sales increased 12 percent to 28,145 cars compared to 24,957 units sold during the same period last year.

An analyst said the discontinuation of Suzuki’s popular Mehran model not only impacted sales of cars under 800CC category, but also local auto-parts’ vendors, as that car used the maximum number of locally made parts. Sale of buses and trucks in December 2019 came down to 312 units from 470 units during the corresponding month of the last year.

Sales of jeeps reduced to 197 units from 531 units during the corresponding period last year. Toyota Fortuner sales fell 50 percent to only 76 units compared to 153 units in December 2018.

Moreover, even tractor sales decreased to 15,219 units in the first half of FY20 from 24,483 units during the corresponding period last year.

Sales of three wheelers (rickshaws) and motor bikes slightly dropped to 128,866 units in December 2019 from 128,959 units last year.

https://www.thenews.com.pk/print/598034-passenger-car-sales-plunge-38pc-in-dec

 

[Ahmet Pasha]

It's highly overpriced junk. What else is there to discuss??

 

[ejaz007]

Honda’s inevitable loss
By BR Research on January 24, 2020

It's not like Honda bit more than it could chew, but even so, business-as-usual tends to bite back when the economy toughens its stance. A loss of Rs41 million in the third quarter of ongoing financial year hardly comes as a surprise considering the beating passenger car segment has received over the last year. Though the company saw a total profit in the nine-month period, it did see a decline of 74 percent from last year. Times have changed.

Market expectations, however, were slightly better though all signs pointed south. The company saw volumes shrink by 66 percent and the slightly lower revenue decline came due to the price hikes the company administered. Demand has been lethargic not only because of the continuous price hikes, but consumers delaying car purchasing decisions for a variety of reasons including shrinking purchasing power and high cost of leasing. Higher finance cost due to monetary policy tightening has also affected the company's short-term borrowing costs which ballooned in the last quarter — now 3.3 percent of revenues. Shrinking advances have been sending the company to the bank, when bank costs are substantially higher than same period last year.

Quarter Oct- Dec Honda Atlas Cars (HCAR)
(Rs mn) 2019 2018 chg
Sales 9,864.6 21,292.8 -54%
Cost of Sales 9,218.3 19,663.8 -53%
Gross Profit 646.3 1,629.0 -60%
Distribution cost 241.4 291.6 -17%
Administrative cost 172.6 171.5 1%
Finance cost 322.8 1.9 171x
Other operating expenses (27.5) 528.3 -105%
Other operating income 10.2 232.1 -96%
Profit (Loss) before taxation (52.9) 867.8 -106%
Tax (reversal) (11.6) 266.2 -104%
Profit (Loss) after taxation (41.3) 601.6 -107%
Earnings per share (Rs) -0.29 4.21 -107%
Sales (Civic, City and BR-V) 3,692 10,824 -66%
GP Margin 7% 8% -14%
NP Margin 0% 3% -115%
Finance costs as % of revenues 3.27% 0.01%
Indirect expenses as % of revenues 4% 5% -16%
Source: PSX, PAMA

Margins have also suffered, though evidently not by a lot, even though the company imports a good share of its inputs from abroad. Rupee devaluation could have hit harder, but the company shielded itself by prudently raising prices — though, demand did suffer as a result. There is a certain extent to which new car buyers can absorb the incremental price tag. Inventory pile up has also pushed the company to keep plants closed for several days.

There was a tax reversal during the quarter which provided a small buffer. Honda cars are considered luxury products and demand is not going to recover any time soon, given that tax burden is higher, price tags are heavier, and cost of borrowing is also up.

https://www.brecorder.com/2020/01/24/564497/hondas-inevitable-loss/

 

[Haris Ali2140]

List of new car plants being installed:

 

[ejaz007]

Car sales fall 48pc in January

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KARACHI: Car sales plummeted 48 percent year-on-year to 11,787 units in January as waning buying power amid economic slowdown continued to take toll on auto industry.

Brokerage Topline Research on Tuesday said car sales were recorded at 22,513 units in the corresponding month a year earlier. In January, car sales slightly fell two percent month-on-month contrary to historical trend.

Hammad Akram, analyst at Topline Research said car sales tend to rise month-on-month in January owing to the New Year phenomenon. The last time car sales declined in January was back in 2006.

Excluding sales of Pak Suzuki Motor Company (PSMC), car sales increased 87 percent month-on-month last month. In mid-December last year, PSMC announced increase in car prices, which got effective from January this year 2020, resulting in pre-buying in December.

In January, sales of Indus Car and Honda Car increased 72 percent to 4,022 units and 120 percent to 2,210 units, respectively, over December 2019. Those have been the highest monthly sales recorded by Indus and Honda so far in the current fiscal year, Akram said.

“We believe car sales to have largely bottomed in December 2019, with major impetus likely to be seen from the start of FY2021,” he added.

Overall, car sales trend remained dismal for all three players in January compared to the same month a year earlier. Car sales by Pak Suzuki, Honda and Indus tumbled 53 percent to 5,555 units, 51 percent from 4,518 units and 36 percent from 6,249 units, respectively.

Akram said car sales dropped 45 percent to 78,806 units in the first seven months of the current fiscal year units owing to higher car prices and high interest rates.

Honda witnessed the biggest sales drop, in terms of percentage points, with its volume standing at 10,356 units in July-January 2019/20 compared to 28,796 units in the comparable period a year ago, depicting a 64 percent decrease.

Car sales by Indus slid 53 percent to 18,197 in 7MFY2020. PMSC’s sales dipped 33 percent to 50,253 in the period under review. Sales of motorcycles and three-wheelers fell four percent year-on-year in January. Their sales, however, rose 11 percent month-on-month. In July-January period, sales of motorcycles and three-wheelers dived 11 percent to 740,043 units.

Motorcycle sales by Atlas Honda remained flat at 95,016 units. However, they were up 12 percent year-on-year. Tractor sales recorded a 92 percent month-on-month increase in January, led by Al-Ghazi Tractors’ growth of 530 percent, while Millat Tractor’s sales also increased 30 percent. In July-January, tractor sales were down 38 percent to 17,447 units, the brokerage said, citing statistics of Pakistan Automotive Manufacturers Association.

https://www.thenews.com.pk/print/612443-car-sales-fall-48pc-in-january

 

[Syed1.]

92% increase in tractor sales is amazing news

 

[maithil]

Auto industry woes multiply as sales dip

Pakistan’s auto sector continued to show dismal performance during the first seven months of 2019-20 with cars sales plunging by 44 per cent year-on-year, reported the data released by Pakistan Automotive Manufacturers Association.

The rest of the segments followed as trucks sales dipped by 44.8pc, buses 30.6pc, jeeps 49.7pc, LCVs (pickups) 47.3pc, farm tractors 37.6pc and two- and three-wheelers 11pc.

https://www.dawn.com/news/1533961/auto-industry-woes-multiply-as-sales-dip

Sale of farm tractors decreasing by 37.6% should be most worrying for government. This means agricultural economy is also under severe recession and set to contract.

 

[ejaz007]

Three auto plants closed
By RECORDER REPORT on March 24, 2020

Indus Motor Company Limited (IMCL), Pak Suzuki Motors Company Limited (PSML) and Yamaha Motor Pakistan (YMP) on Monday announced to shut plants and offices during lockdown in Sindh.

According to details, in line with the notification issued by Sindh government to put lockdown into place in Sindh to avert the spread of COVID-19 in the province, these auto companies have decided to close its operations in Sindh from March 24, 2020 till April 6th 2020 or further orders.


https://www.brecorder.com/2020/03/24/582876/three-auto-plants-closed/

 

[ejaz007]

Porsche scam: Car dealer booked for ‘defrauding’ customers in Lahore

• Around 15 people had filed complaints in different police stations of Lahore.
• Bokhari had received around Rs50 million in advance from them, giving them a specific time for the delivery of the electric vehicle.

BR Web Desk 11 Feb 2021

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The local dealer of a renowned international car brand in Lahore has been booked by police in several cases for committing fraud with the customers.

As per details, around 15 people had filed complaints in different police stations of the city including Ghalib Market, Gulberg, Sarwar Road and Naseerabad, against the Porsche Centre Lahore Performance Automotive Pvt Ltd owner Syed Abuzar Bokhari.

They claimed that they had given him advance amounts to buy new Porsche Taycan 4S cars, but did not get any vehicle.

It was reported that Bokhari had received around Rs50 million in advance from them, giving them a specific time for the delivery of the electric vehicle.

The complainers alleged that Bokhari had told them that he could not deliver the cars and they could take their money back.

The dealer then gave them cheques worth millions of rupees for the amounts they had deposited with him, the complainants said.

However, on submitting with the banks concerned the cheques were bounced, they regretted.
It was reported that fraudulent party after taking the huge sum of money from the customers made a stop in Dubai and later fled to London, England.

Porsche Pakistan has seemingly been in a legal war with the fraudster for quite some time. The company has ensured that it is employing all viable means to bring the perpetrators to justice and expect the whole situation to reach a favorable end soon.

Porsche scam: Car dealer booked for ‘defrauding’ customers in Lahore

* Around 15 people had filed complaints in different police stations of Lahore. * Bokhari had received around Rs50 million in advance from them, giving them a specific time for the delivery of the electric vehicle.

www.brecorder.com

 

[ejaz007]

KIA Lucky Motors increases prices of Sportage, Picanto and Carnival models

• Also reveals prices of its newly-launched Stonic

Syed Ahmed Updated 08 Nov 2021

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KIA Lucky Motors Pakistan increased prices on various makes and models over the weekend, according to rates available on the company website.

Although there was no official announcement, data available with dealers also says ex-factory prices of KIA Sportage, Picanto, and Carnival were increased by as much as Rs500,000.

Following is a comparison of the new prices of each car:

Sportage

KIA Sportage, the company's most popular model, has seen its prices jump by up to Rs380,000.

Lucky Motor Corp issues safety warning to Pakistan's Kia Sportage owners

The new price of KIA Sportage AWD is Rs5,650,000 as compared to the old price of Rs5,270,000 – a hike of Rs380,000.

The Sportage FWD, which was selling for Rs4,782,000 until Friday, now costs Rs5,150,000, thanks to a price surge of Rs368,000.

Similarly, the price of KIA Sportage Alpha has jumped by Rs356,000 to Rs4,650,000 against its old price of Rs4,294,000.

Picanto

The prices of KIA Picanto have surged by up to Rs269,000.

Pakistan's carmakers announce price reduction as tax cuts take effect

The ex-factory price of KIA Picanto AT was Rs1,922,000 until Friday. It will now sell at Rs2,150,000, with a hike of Rs228,000.

The manual version of the car has seen a price hike of Rs269,000 and is now priced at Rs2,050,000 against the old price of Rs1,781,000.

Grand Carnival

Further, the prices of KIA Grand Carnival have gone up by Rs500,000 on both GLS and GLS+ versions. The new prices of the 11-seater Grand Utility Vehicles (GUVs) are Rs9,199,000 and Rs9,999,000, respectively.

Various automakers have been signalling at a price-hike in recent weeks, citing rupee depreciation and an increase in prices of imported materials used in assembling vehicles as the reasons.

Auto assemblers and manufacturers had earlier revised prices downwards in July, following the government notifying lower additional customs and federal excise duties.
Lucky Motor Corp likely to launch KIA Stonic, Peugeot 2008 in Pakistan
Prices of Stonic also revealed

Meanwhile, the company also announced the prices of the newly-launched KIA Stonic on its website.

Holding true to market expectations, Stonic EX is priced at Rs3,660,000, while the EX+ variant is at Rs3,880,000.

Bookings have started from today (Monday), with a 30-day delivery promise, according to an authorised company dealership.

KIA Stonic is a subcompact crossover SUV (B-segment). The vehicles are being locally assembled at the KIA plant located in Port Qasim.

The launch of the new model comes hand-in-hand with price-hikes on Sportage, Picanto and Grand Carnival.

KIA Lucky Motors increases prices of Sportage, Picanto and Carnival models

* Also reveals prices of its newly-launched Stonic

www.brecorder.com

 

[ejaz007]

Car prices: Carrot failure
BR Research Updated 10 Nov 2021

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Car prices are increasing. Assemblers are facing cost pressures due to currency depreciation, increase in commodity prices, shortage of integral parts such as semiconductor chips, and a steep hike in freight costs. Recall that the government recently slashed taxes and duties on vehicles to help lower car prices. Obviously, the Ministry of Industries and EDB are not happy at this price increase, so soon after the relief provided to assemblers in the budget. Though at the same time, higher car prices suit the Ministry of Finance and SBP who are in the quest to reduce demand and lower the current account deficit.
Last month, one small player attempted to increase prices, but was snubbed by the government. Now bigger players are increasing prices. One big player that had not increased any of its car price since the launch has already communicated the price increase. Another—the industry leader—has also increased the prices. Others may follow. Expectedly, price increases will become effective from December and January, though not all cars will experience the same level of price hike and not all auto assemblers will raise prices.
This is a dynamic game. There are higher number of players in the market. Some models are selling like hot cakes while others are struggling. In a few cases, supply chain disruption is delaying deliveries – this is true for some models of Suzuki and Tucson. Vehicles that are high in demand have gotten pricier like Toyota Yaris and Kia Sportage. The assemblers may try their luck to sell cars at the same price where they have CKD inventories—true in the case of Sorento and Elantra. And where the delays are long, assemblers may refrain to increase prices – for example Tucson.
The increase in price in percentage terms could be higher for smaller cars – for example Picanto—as the freight cost is relatively higher for smaller cars. In the case of cars which were launched post budget, the assemblers have already kept enough margins in anticipation of cost escalation—this is the case for Honda City and Sonata. There might be no or little price increase in these cars.
KIA Lucky Motors increases prices of Sportage, Picanto and Carnival models
Lucky Motor has increased the prices by 7-15 percent. The higher jump is plausible, as the company is revising up the prices for the very first time. Indus Motor has also raised prices by 5-7 percent. Seeing this, Honda may have similar increase in Civic; but City is already at a premium to its competitor Yaris, and Honda may not change the price of that. Suzuki is tempted to increase prices as there is immense pressure from Japanese to do so – but in some models they are struggling to keep commitment on delivery times. Hence, the increase is expected to be less.
Toyota Pakistan increases prices on its entire lineup
Nishat Hyundai is a safe player. It believes in margins, not volumes. The company is not spending top dollar on ECUs and is currently delivering smaller number of cars a month. The consumer is not happy with delays. Any price increase (in Tucson) could be detrimental for the vehicle’s brand image. Meanwhile, the company may not increase Elantra’s price to maintain a price competitive advantage against similar Sedan models in the markets including the newly launched compact SUV by Kia. Smaller players like Master Motors are likely to increase prices too.
The objective of lowering taxes and duties in the budget was to help boost vehicle sales and attain a critical mass of 500,000 cars a year, given that the industry is operating at half the capacity. The theory was that lower car prices, specially of smaller cars, would encourage volumes which are needed for substantial localisation. Specially for new entrants, localisation is pretty low. But if prices are raised again, the earlier move to slash duties would become redundant. This has been highlighted in this space already.
The new auto policy is in the making and soon it will be presented in the ECC and cabinet thereafter. One element in the new policy is the formation of a price monitoring body which would consist of representatives from government, industry, EDB, accountants and civil society. In the new policy, the government might want to get some control on pricing through SROs 655 and 656.
Price controls are tricky and more often than not, difficult to justify. But the auto industry does not operate in a free market since assemblers are protected heavily from imports and domestic competition was non-existent for decades until very recently when new entrants began launching cars. In fact, one could argue, that assemblers haven’t exactly faced true competition from even peers yet. Assemblers have always had pricing power, often at the expense of the consumer. That justifies opening the conversation on price curbs, specially when the recent government “carrots” to cut down its own tax revenue has ricocheted back with prices about to go back to pre-budget levels—which was always going to be happen if one thinks about it. Other important regulatory interventions such as ensuring quality and safety of the vehicles needs to be on the agenda as well.

Car prices: Carrot failure

Car prices are increasing. Assemblers are facing cost pressures due to currency depreciation, increase in commodity...

www.brecorder.com

 

[Crimson Blue]

I have a question for all the experts on Pakistani car industry:

Is there any plan (or was there ever a plan) to manufacture auto transmission a.k.a gear box or automobile engine in Pakistan?

 

[ejaz007]

Indus Motor Company announces temporary shutdown of plant from Aug 1​

• Company says insufficient inventory levels to maintain further production forcing it towards temporary production shutdown
• Plant to stay closed till August 13, 2022

BR Web Desk Updated 29 Jul, 2022

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1
Indus Motor Company (IMC), the assembler of Toyota vehicles in Pakistan, on Friday announced that it has decided to temporarily shut down its production plant from August 1, 2022 to August 13, 2022.
The official announcement comes just days after Business Recorder reported that IMC is planning to temporarily shut its production of all variants.
In its notice sent to the Pakistan Stock Exchange (PSX), IMC said it faces insufficient inventory levels required to maintain further production.
“Due to unforeseen devaluation of the Pakistani Rupee, coupled with the government restrictions, including the Letter of Credit (LC) approval constraints rendering it impossible to import Completely Knocked Down (CKD) kits without prior permission, and the continuing economic instability, the company is facing hurdles in import of CKD kits and components which is adversely affecting the supply chain and production activities,” read the notice.
It added that the situation is forcing the company towards a temporary production shutdown and closure of its plant.
“In the light of above, the company has today decided to temporarily shut down its production plant from August 1, 2022 to August 13, 2022.”
On Thursday, the Economic Coordination Committee (ECC) of the Cabinet decided to lift the ban on the import of all the items except completely built units (CBUs) of auto, mobile, and home appliances.
Back in May, the government, in order to curtail the widening current account deficit (CAD), had imposed a ban on the import of about 33 classes/ categories of goods. As a result of the decision, overall imports of the banned items reduced by over 69% i.e., from $399.4 million to $123.9 million.
A review meeting was also held to review the ban after two months owing to serious concerns raised by major trading partners on imposition of the ban and considering the fact that the ban has impacted supply chains and domestic retail industry.
As imports have reduced substantially, the ECC decided to lift the ban on imported goods except for Auto CBU, Mobile CBU and Home Appliances CBU.
Further, all held-up consignments (except items which still remain in banned category), which arrived at the ports after July 1, 2022 may be cleared subject to payment of 25% surcharge.
Earlier this week, Business Recorder reported that Pakistan’s auto industry is struggling to meet its scheduled delivery periods as restrictions have hindered timely import of auto parts, prompting one assembler to offer refunds to its customers.
The industry, highly dependent on imports, has been caught in the midst of an exchange-rate crisis with players in the auto sector either passing on the impact of rupee depreciation to its customers or, in the case of Indus Motor Company (IMC), offering its customers refunds with an additional payment of interest on it.
“The entire industry has scaled back production – in some cases, more than 50% of capacity,” IMC CEO Ali Asghar Jamali had told Business Recorder on Monday.
“There is no clarity (on the exchange rate). We will give the option to the customer to take a refund with a full-interest amount.
“In case the customer doesn’t want to choose this option, they will have to wait at least three months from the delivery month given on the PBO (Provisional Booking Order Form) and pay the price-difference due to the exchange rate situation,” Jamali added.
The developments come as Pakistan's rupee remained on its downward slide, depreciating to record lows throughout the week to finish near the 240 level on Thursday.
The strain on the currency comes as foreign exchange reserves held by the State Bank of Pakistan (SBP) fell further to $8.58 billion, much lower than the level required for two months of import cover.

Indus Motor Company announces temporary shutdown of plant from Aug 1

* Company says insufficient inventory levels to maintain further production forcing it towards temporary production shutdown * Plant to stay closed till August 13, 2022

www.brecorder.com

 

[ejaz007]

Pak Suzuki increases car prices by up to Rs661,000​

• Swift's GLX CVT variant sees biggest hike

Bilal Hussain Updated about an hour ago

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Following in the footsteps of other automakers, Pak Suzuki, the company with the biggest market share in the country, has jacked up car prices with effect from August 1, it was learnt on Monday.
The company has raised the price of its top-of-the-line Swift GLX CVT model by Rs661,000, which was the biggest jump across all models. Price of the 1,200cc hatchback is now Rs3.959 million.
Meanwhile, Alto’s basic variant VX price sees an increase of Rs314,000. The car is now marked at Rs1.789 million.
“Suzuki’s customers are very price sensitive,” said Ahmed Lakhani, an auto industry expert. “The company has appeared to have passed on the minimum impact of rupee-depreciation since it last jacked up car prices. The rupee has depreciated much more, while the company has increased prices by 20% on average.”

Lakhani said the auto industry does not only have to face an increase in the price of imported auto parts, but also higher energy and transportation costs as the rupee loses value.
However, Lakhani said he does not see demand dropping too much even as automakers raise prices, adding that even restrictions by the State Bank of Pakistan on auto financing could not slow down car sales.
“If Toyota has been selling 60,000 to 65,000 cars a year, its sales may drop to 55,000 cars. It will not be more than that.
“However, the supply side may remain choked due to restrictions on opening of LCs,” he said. “Therefore, car sales may come down because of supply side issues.”

Pak Suzuki increases car prices by up to Rs661,000

* Swift's GLX CVT variant sees biggest hike

www.brecorder.com