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Pakistan’s Auto sector sees a 250pc uptick in car sales YoY

Cumulatively, during the current 11MFY21, the vehicle sales amounted to 217,217 units, registering an increase of 62 percent YoY. It must be mentioned here that this number is higher than the number of vehicles sold in the pre-pandemic era.

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The data released by the Pakistan Automotive Manufacturers Association shows that the automotive industry sales for the last month of May 2021 topped at 20,302 units.

This was a 217 percent increase Year-on-Year compared to May 2020. In the Passenger Cars + LCV section, May 2021 saw 15,696 units being sold, which was a 250 percent increase, coming up from 4527 units sold in May 2020.

It must be mentioned that cumulatively, during the current 11MFY21, the vehicle sales amounted to 217,217 units, registering an increase of 62 percent YoY. It must be mentioned here that this number is higher than the number of vehicles sold in the pre-pandemic times.

However, on a month-on-month level, the auto sales showed an 8 percent decline, which according to AKD analysts is because of the supply-side constraints.

The AKD report published on Tuesday shows that in terms of displacement during the month of May 2021, the sales of 1300cc and above cars declined 20 percent, MoM, to 5484 units, due to a slowdown in production.

The sales went down from 6838 units in April 2021, however, when compared for the 11MFY21 compared to the same period of the last month, the sale increased by 93 percent, selling 68,055 units in the current FY21’ compared to 35,334 units in FY20, the PAMA data revealed.

For the 800cc and below segment, the sales were down 14 percent MoM for the 11th month of the current fiscal year 2020-21. However, the reason given by the analysts is that of price fall anticipation, due to GST slashing in the budget for the upcoming fiscal year 2021-22.

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The recent FY22 budget slashed the GST from 17% to 12.5% and removed the 2.5% FED on cars up to 850CC. In addition to this, GST on hybrid electric vehicles has been slashed to 8.5% for up to 1800CC and 12.75% for up to 2500CC. The GST on the sale of local Electric Vehicles (EVs) is applicable at 1% while the import of CKD kits of EVs is exempted from GST.

It must be mentioned here, that among the auto sector, the 1000cc cars saw an uptick in sales on both MoM and YoY bases, with a 20 percent and 153 percent increase, respectively.

From the industry point of view, the sales of tractors saw a 128 percent increase in May 2021 compared to May 2020, and cumulatively, for the 11MFY21 the sales went up 67 percent compared to the same period in the preceding fiscal year.

Company-Wise sales

The PAMA data compares, Pakistan Suzuki Motors Company (PSMC), Indus Motor Company Limited (INDU), Honda Atlas Cars (HCAR), Millat Tractors Limited (MTL), and Al-Ghazi Tractors Limited (AGTL).

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According to the AKD analysis, the HCAR and INDU saw the greatest decrease month-on-month, both showing a 13 percent fall in sales in May 2021, compared to April 2021, and the only company that saw an increase in sales was AGTL, of 1 percent month-on-month.

Pak Suzuki saw a 39 percent increase in MoM sales of its Cultus in May 2021, as 1820 units of the city car were sold compared to 1312 units sold in April 2021. WagonR sales remained relatively at 1,491 units in May 2021, compared to 1447 units sold in April 2021. According to analysts, this provided a cushion for the company.

As already mentioned, the sales of Suzuki Alto fell, as it belongs to the newly subsidized less than 880cc category, where the tax was slashed. The sales fell from 4,091 in April 2021 to 3,375 in May 2021, showing an 18 percent decline.

The analysts expect the average retail price of Alto (all variants) to be slashed by Rs83,000. With the decrease in prices as well as GOP’s “Meri Gaari Scheme”, the volumetric growth of Alto is expected to drive the sales of PSMC up.

Toyota Indus has shown a decline in sales across the board, with the new Yaris’ sales showing a decrease of 19 percent MoM, Corolla sales down by 12 percent MoM, owing to the global shortage of supply of semiconductor chips, leading to supply chain issues.

It is important to mention that the FY22 budget slashed the general sales tax (GST) on imported hybrid vehicles (up to 1800CC) from 17% to 8.5% which may negatively hamper the sales of Yaris and Corolla.

Still, the analysts expect the quantum of imports to be low due to stricter policies, creating operational difficulties to import cars.

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Lastly, the sales of Honda Atlas’s City and Civic also saw a decline of 23 percent MoM, while the Honda BRV sales increased 79 percent, MoM. This can be attributed to the new model’s availability and the global supply chain disruptions.

According to the official dealers, the pre-booked numbers of new Honda City have crossed the 7,000 mark, that too before the official launch. Meanwhile, the proceeds from advance booking are expected to increase the other income for the company.

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