Car Sales Drop in FY 2019 Due to New Restrictions & Higher Prices

Due to the fall in the value of the rupee and other economic setbacks, sales in the country’s auto sector fell to 237,950 units, a drop of 8% in FY19.

According to Shajar Research, there are multiple reasons for the fall in sales including limitation on tax non-filers in the first half of the last fiscal year, increase in the interest rate to 12.25%, multiple price hikes by the car manufacturers and appreciating USD/PKR parity by 31% YoY.

Hammad Akram, Topline Securities’ analyst said, “Sales of the auto sector declined after a gap of six years due to multiple factors mainly the restriction on non-filers from purchase of new cars, a significant hike in auto prices due to rupee depreciation and economic slowdown.”

The Pakistan Auto Manufacturers Association (PAMA) released information showing that passenger cars saw their sales drop by 2% to 191,344 units in FY19, the major reason being the increase in cost of various vehicles.

According to Shajar Research, there was a 24% fall in the sales of cars with 800CC-1000CC engines, a total of 35,008 units as Pak Suzuki pulled the plug on its Mehran and introduced the 660CC Alto which recorded 1,685 sales last month.

There was a striking fall in the sales quantity of LCVs and SUVs in fiscal year 2018-19.

There was an increase of 2% to 100,959 units for cars with over 1300CC engines. In FY2019, sales of cars of 1300cc and above engine capacity increased 1.83 percent to 100,959 units while in FY18, their sales had been 99,138 units.

Toyota Corolla saw the sales increase by 10.32% to 56,720 units whilst Honda saw a fall in both the Honda Civic and City with a fall of 9.23% to 29,189 units. Interestingly, Pak Suzuki saw its models, the Cultus and WagonR, record an impressive 11.44% increase in sales to 55,377 units.

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