Some info on Pakistan Car Sales!! -
PakWheels.com : Car sales dropped 13pc in FY08 (AutoMobile News...)
Subject : Car sales dropped 13pc in FY08
Saturday, July 12, 2008
By our correspondent
KARACHI: Local car market suffered another year of declining sales in 2007-08 as car purchases dropped by 13 per cent due to various factors.
The weak sales during the year had been primarily due to uncertain political and economic conditions, halt in auto financing by banks due to loan defaults, increase in interest rates resulting in expensive auto financing, rise in prices due to imposition of withholding tax and excise duty, further increase in prices because of rising costs and continued influx of second hand imported CBUs (completely built units), said Bilal Hameed, auto analyst at JS Global Capital.
According to figures for auto sales released by the Pakistan Automotive Manufacturers Association (PAMA), he said auto sales (cars and light commercial vehicles) dropped 8 per cent at 187,412 units in FY08 compared to 204,212 units sold last year. Interestingly, on month-on-month basis, auto sales rose 11 per cent in June this year.
He said the increase in monthly sales had been due to the year-end effect. Assemblers as well as their distributors need to achieve their targets by the end of the year for which aggressive marketing policies are implemented. The assemblers offer incentives to their distributors in terms of higher commission on sales if targets are achieved. Moreover, sales of LCVs rose on account of harvesting season.
Looking at car sales alone, it showed a poor performance during FY08 and fell by 11 per cent to 147,441 units against 165,268 units last year. The share of cars and LCVs in total auto sales came to 79 per cent and 21 per cent respectively.
He added all four major vehicle assemblers depicted a negative growth during the year under review.
However, Pak Suzuki and Indus Motor performed relatively better as their sales dropped by 7pc and 2pc respectively. Other assemblers, Dewan Farooque and Honda Atlas, posted negative growth of 25pc and 23pc respectively.
Another auto analyst Mohammad Rehan Khan at First Capital Research said the fall in overall market could be attributed to price hikes made to pass on the impact of rising input costs, followed by a slowdown in car financing amid rising mark-up rates, political instability and presence of alternatives like CBUs.
Completely knocked down (CKD) kits share improved to 91 per cent in the local market despite an 8 per cent lower volume. Performance of locally assembled vehicles or CKD remained sluggish during FY08. Cumulative sales of locally made private cars and light commercial vehicles stood at 187,000 units during the year against 204,000 the previous year, he added.
With shrinking trading and economic activities, the performance of LCV segment also remained muted, recording a meagre growth of 3 per cent at 40,000 units compared to 39,000 previously. The share of LCVs in CKD pie during FY08 increased to 21pc against previous level of 19pc.
He said the market share of used CBUs had kept shrinking owing to the restrictions imposed on import of higher age cars. Their share in the total market dropped to 9pc compared to 13pc the previous year.
During FY08, 18,000 CBUs (6,000 new and 12,000 used) were imported.
In the overall market, used cars captured 6pc share, which was 10pc a year earlier.
“It is not expected that local car sales will resume the previous growth trend in the near term owing to slowdown in auto finance amid rising mark-up rates and pass-on impact of cost rises while the newly imposed levies on car purchase are likely to increase prices over the affordability level of buyers,” he said.
Moreover, the margins of the sector are also anticipated to remain under pressure owing to rising steel prices and an unfavourable exchange rate.
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