For the first time ever, passenger automobile sales in the United States increased unexpectedly in December 2021, despite the fact that sales often decline at the end of the year as purchasers favor New Year purchases over the last month of the previous year.
PAMA’s (Pakistan Automobile Manufacturers Association) data reveals some startling statistics.
The 660cc Alto, for example, sold 9,195 units, the most number of any locally produced model ever. Pak Suzuki was able to sell the most cars in a single month since its founding, with 15,503 units sold in December 2021. Honda Atlas also claimed to have sold 4,708 Civic and City models, claiming to have sold more than that.
Read more: Pakistan: Local car industry records 62% growth in fiscal year 2021
What is actually happening?
The significant thing to note, however, is that the sales numbers in PAMA data are actually ‘bookings’, when an automaker receives payment for a car, it’s considered as sold. Contrary to other markets where deliveries are actually counted as sales. This simply means that more than 9,000 units of Alto were booked, more than combined 4,000 units of Civic & City were booked
This happened because a large number of cars were booked in anticipation of another hike in prices following the approval of the mini-budget, which see added duties & taxes imposed on vehicles. Bear in mind car prices were already substantially increased in two steps, the first was implemented in November/ December 2021 and the other in January 2022.
So how come all of a sudden despite the alarming price increase & recent restrictions on car financing, car sales are soaring so high. This is most likely due to the presence of a huge number of investors in the market compared to genuine buyers. According to recent research by the Pakistan Institute of Development Economics (PIDE), it has been revealed that up to 90% of passenger vehicles in Pakistan are sold against premium/ on money.
The future looks promising for the automobile industry
According to the study, the automobile industry has made undocumented transactions of up to Rs 170 billion in the previous 5 years under the guise of additional costs, also known as own/ premium, paid to dealerships in order to receive rapid delivery of a vehicle.
Read more: Oped: The Chinese car industry explained
Today, automakers are pleased because units are being sold in record numbers, and investors are pleased because they are making substantial profits without having to do much work; nevertheless, the number of new car registrations will reveal if these vehicles are reaching genuine buyers or not. The current market situation indicates that genuine customers would have to wait several months for the delivery of a new vehicle. Sales are currently at an all-time high.
The true picture will emerge when PAMA decides to disclose figures only when the units are delivered to the customers, and not just the number of bookings counted as sales.