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Wednesday, May 22, 2024

Car sales soar as Pakistan’s economy recovers

Pakistan's automobile industry has shown immense recovery as the mitigating effects of the coronavirus pandemic recede

Pakistan automobile industry promising jump. From data available at Pakistan Automotive Manufacturers Association (Pama), the increase in car sales has been 192.76% from May to June 2020. The number of cars produced has gone up by 768% from May to June of this year. This is mainly due to the mitigations that the auto-industry suffered due to the coronavirus pandemic, being uplifted.

Two and three wheelers saw a 427% jump in production while a 385% jump in sales from May to June. The recovery has been significantly aided by the timely easing of the lockdown.

Automobile industry recovers

Furthermore according to the data the automobile saw an increase of 16% in year-on-year car sales, which were recorded at 11,678 units in August 2020 as compared to 10,102 units in the corresponding period of the previous year.

The reversal of trend came on the back of lower interest rates coupled with a recovery in economic activity. Indus Motor Company and Honda Atlas Cars registered sales growth, but Pak Suzuki Motor Company recorded a decline in sales volume.

Honda Atlas Cars recorded the highest increase in sales volume on a year-on-year basis with a 72% rise to 2,258 units. The company managed to sell 1,314 units in the same month of last year. Indus Motor enjoyed a 52% growth as sales rose from 2,173 units in August last year to 3,307 units in August 2020. On the other hand, Pak Suzuki Motor reported a 9% fall in sales to 6,003 units in August 2020 against 6,615 units in August 2019.

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Meanwhile, in neighboring India, car sales fell 23.3 percent from April to June 2019. This was the biggest contraction in the automobile industry since 2004. One reason behind this huge drop was the fall in the purchasing power of people. Two-wheeler sales contracted by 11.7 percent during the period.

Tractor sales, which are good barometer indicators of rural demand, fell by 14.1 percent, the highest fall in nearly four years.

Other sectors of the economy recovering

As reported by Profit Pakistan, the construction sector – boosted by recent changes in government policies meant to stimulate growth in the residential real estate sector – has seen a massive boom, with cement manufacturers reporting that they are operating at above their installed capacity as an industry.

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Total cement production hit an all-time high of 5.7 million tons in the month of October 2020, according to data from the All Pakistan Cement Manufacturers Association, quoted in a research note sent by Topline Securities, an investment bank, to clients on Thursday, October 29, 2020. That is up about 15% compared to the same month last year, and up about 10% compared to September.

That number represents about 103% of the installed capacity of the cement manufacturing industry in Pakistan, which consists of 25 companies that can collectively produce about 69 million tons of cement and 66 million tons of clinker – stony material that is produced as an intermediary product in the production of Portland cement – in a given year.

“This is likely to take industry’s capacity utilization (adjusted for closed plants) to 103% in October 2020 compared to 94% in September 2020,” wrote Shankar Talreja, an equity research analyst at Topline Securities, in his note to clients last week.

GVS News Desk