Car Sales slumped by 50% as a result of Low Demand

Car sales for the first four months of the fiscal year 2023–2024 were 20,871, a significant YoY fall of 47.4%. Pakistan's auto sector has several obstacles, including poor demand, depreciating currency, rising inflation, and political unpredictability. These problems have been made worse by recent interruptions in the supply chain for essential components. The car industry is still not given as much attention by the State Bank of Pakistan (SBP), and some import restrictions still apply to necessary parts, which makes manufacture more difficult.

Car sales in Pakistan had a sharp reduction, with numbers coming in at 6,200 units, indicating a major decline of 54 percent year over year (YoY) and a decline of 26 percent month over month (MoM). The alarming pattern was not limited to PAMA (Pakistan Automotive Manufacturers Association) members; it included almost 7,000 units that were down 26% MoM and 53% YoY.

Factors Affecting Month-to-Month Drop

Reduced demand and supply chain disruptions are the main causes of the MoM decline in automobile sales. In its industry study, Topline Securities identified a number of other reasons that contributed to the YoY sales loss, including rising car costs, costly auto financing, and customers' declining spending power.

Summary of Performance for 4MFY24

PAMA reported a significant decline in automobile sales for the first four months of fiscal year 2024 (4MFY24), with a total of 27,163 units sold. This is a 44 percent YoY fall in comparison to the same time in the previous fiscal year, when 48,573 units were sold.

Performance of Major Car Manufacturers

With a 34 percent MoM decrease in sales and a 66 percent MoM decline in sales, Honda Car (HCAR) and Indus Motors (IMC) were the poorest performers. This decline was ascribed to plant closures brought on by low inventories. In October 2023, Pak Suzuki (PSMC) reported selling 3,810 units, a 10% month-over-month decline. With 175 units from the recently released Santa FE, Hyundai had a 54% MoM fall in sales in October.

Tractor Sector Structure

In October 2023, the tractor industry witnessed decreases of 5% MoM and 49% MoM for Al-Ghazi Tractors (AGTL) and Millat Tractors (MTL), respectively. Despite this, the low base of the previous year due to floods was primarily responsible for the 87 percent YoY growth in tractor sector sales for 4MFY24, which totaled 17,296 units.

Sales of trucks and buses, which are a good indicator of the health of the industrial and transportation sectors, fell by 1% month over month and by 44% year over year to 183 units in October. Truck and bus sales in the first four months of the fiscal year decreased by 45% year over year to 730 units.

Difficulties in Motorcycle Sales

Motorcycle sales decreased by 10% year over year in the first four months of the fiscal year to 371,000 units as a result of increased bike pricing and reduced purchasing power. Bicycle sales also had difficulties in October 2023, down by 5% MoM and 11% YoY. With sales of 90,000 units, Atlas Honda (ATLH) recorded a 5% MoM and 5% YoY decline. The industry's overall sales for 4MFY24 came to 371,000 units, a YoY decline of 10% as a result of rising bike prices and customers' limited purchasing capacity.

Arifa Hussain

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