Pakistan Auto sales declined by 20% year on year in Aug 2018 compared to the same period in the previous year and 6% in the second month of the fiscal year.
This is the first time that auto sales have declined in the first 2 months of a fiscal year since FY15 (excluding Taxi scheme).
The fall was seen due to many factors. Reasons for sales slowdown include a decline in macroeconomic environment and increase in prices of the vehicles.
The price hike was due to rupee devaluation which was hurting the companies’ gross margins and now the price hike has resulted in lower sales volumes.
In August there were fewer working days due to Eid-ul-Adha, Therefore, the plants remained closed for 4 to 5 days during the month which halted the manufacturing process, eventually resulted into both lower sales and lower production.
Another reason for the slow down in car sales was the previous government’s imposed condition allowing vehicles to be sold to filers only.
Pak Suzuki Motor Company (PSMC) experienced a significant decline in sales by 27 percent YoY as the company sold only 8,683 units compared to 11,888 units in the same period last year. A major decline was witnessed in Ravi and Mehran with 50% and 42% YoY decrease in sales.
However, demand for Wagon-R grew 11% year on year due to competitive pricing and demand due to Careem and Uber.
Suzuki has also issued a notification to end production of Mehran VX (Without Air-conditioner) from November 2018 after reaming in the market for almost 30 years. It is also expected to affect its total sales in the current fiscal year.
United Bravo’s launch may have also affected decision-making as Mehran buyers in August as the car was rumored to bring far more features than a Mehran but at a similar price point.
On the other hand, Indus Motors (INDU) reported growth in two months but the company recorded a 9% YoY decline in units sold (compared to a sector-wide fall in sales of 20%).
Sales were led by Hilux, which continued its growth, going up by 23% YoY. On the other hand, Corolla and Fortuner sales dipped by 12% and 23% YoY, respectively.
Honda (HCAR) witnessed a decline with unit sales down by 3 percent. Civic and City sales dropped by 12% YoY while BR-V sales continued its depressing performance, falling by 32% YoY.
Tractors sales declined by 21% YoY, caused by a decline in sales of Millat tractors by 8% and Al-Ghazi tractors by 45% YoY. Furthermore, sales of trucks and buses have also declined by 15% YoY due to a 27 percent decline in sales of Hino.