Pak Suzuki, Honda, and Toyota, often referred to as the “big three” auto companies, are projected to report a combined sales volume of 84,812 units for the financial year 2023-24.
This represents a 23% decline from the previous year and marks a 21-year low, according to a report from JS Research released on Tuesday. In the previous financial year 2022-23, the big three sold 113,346 units.
The sharp drop in sales volume highlights the significant challenges the automotive industry is facing, including rising inflation, currency fluctuations, and changing consumer preferences. The decline is primarily due to reduced consumer purchasing power, an increase in the influx of used imported cars, and higher car prices driven by currency depreciation and taxes on auto manufacturers.
Despite the overall decline, the report predicted that sales for June 2024 would almost double to over 10,000 units compared to the same period last year. This increase was attributed to a lower base from the previous year when plant shutdowns occurred at Indus Motor Company Limited (IMC), the maker of Toyota cars in Pakistan, and Pak Suzuki Motor Company (PSMC). On a month-on-month basis, the three companies were expected to see a modest 10% increase in sales for June, with IMC leading the recovery with an anticipated 44% rise.
JS Research’s auto analyst Wadee Zaman commented on the future trajectory of sales volumes,
The trajectory of volumes going forward can continue with a slow momentum.
He added that while the FY25 budget offers some incentives, such as extending concessionary GST for Hybrids (HEVs) until FY26, the increase in advance tax on local cars and the absence of regulatory duty on lower-priced imported vehicles (below 1,300cc) could hinder the pace of recovery for domestic automakers.
The report also mentioned that the sale of Corolla Cross is expected to be around 900 units in June, as more consumers opted for the hybrid variants amid earlier discussions that the government might remove the concessionary GST on hybrids in the budget.
Additionally, auto loans have continued to decline for the 23rd consecutive month, reaching Rs. 233 billion, down 23% year-over-year. However, with the start of the monetary easing cycle last month and anticipated further rate cuts, there could be a significant increase in auto-financing in the coming months.