Locally produced automobile sales (including light commercial vehicles, vans and jeeps) increased by approximately 66% in the first six months (Jul-Dec) of the fiscal year 2015-16 (1HFY16) compared to the same period of last year, according to data from the Pakistan Automotive Manufacturers Association (Pama).
Auto sales increased to 111,720 units in 1HFY16 from 67,426 units in the same period of last year due to improvements in the overall economic situation, a rise in auto financing and the Punjab Taxi Scheme.
“We expect auto sales to remain strong in the next half even thougPunjab Taxi Scheme ending in the next few months,” Sherman Securities analyst Sadiq Samin commented.
All three carmakers in the country increased prices by 1% to 1.5% to pass on the impact of a 1% increase in customs duty on imported parts in December 2015, which was part of a government drive to generate additional revenues of Rs40 billion from different sectors.
Car assemblers passed on the increase in cost easily due to strong vehicle demand in the country, Topline Securities reported.“As a result, we now forecast local car sales to grow by 15% to reach 206,777 units by the end of June 2016. The report added that this lower growth is due to the completion of the taxi scheme in February 2016 and the decline in Civic volumes in anticipation of a new model, which is expected to hit the market in July 2016,” the report added.
Sales of Pak Suzuki Motor – the largest carmaker in the country – increased 97% year-on-year (YoY) to 70,482 units in 1HFY16, primarily due to the Punjab Taxi Scheme.
Contrary to the historical trend, volumes rose 3% month-on-month (MoM) in December 2015 because of the taxi scheme. Historically, it has been observed that customers defer buying plans in December due to the year-end phenomenon, as they prefer to purchase and register vehicles in the first month of the new year.
Indus Motor – the maker of the Toyota Corolla – sold 30,481 units in 1HFY16 versus 22,883 units in 1HFY15. In December 2015, sales stood at 4,738 units, up 16% YoY. However, on an MoM basis, sales declined 14% due to the year-end phenomenon.
Honda Atlas Cars sold 10,610 units in 1HFY16 compared to 8,578 units in the same period last year. In December 2015, the company sold 1,028 units, up 49% YoY (down 33% MoM).
Analysts believe the sales volume of the Honda Civic is expected to dry out in the coming months in anticipation of a new model launch in July 2016.
Taurus Securities commented that it remains optimistic about auto volumes and believes sales will cross 215,000 units in FY16 owing to the Punjab Taxi Scheme, stable Corolla sales and recovering demand for Honda Atlas Cars.
Moreover, improving the GDP outlook, rising income levels, lower interest rates, and banks’ focus on high-return auto financing would improve automobile demand.
