The passenger car industry in Pakistan has experienced a staggering 85% drop in year-on-year sales, largely due to non-production days, prolonged Eid ul Fitr holidays, and a reduction in consumer buying power.
The Pakistan Automotive Manufacturers Association (PAMA) reports that passenger car sales plummeted to 2,844 units compared to 18,626 units sold in April 2022. In the first ten months of the 2022-23 fiscal year, only 88,620 units were sold, marking a 54% decrease from the 191,238 units sold during the same period in the previous fiscal year.
Analysts from Arif Habib Limited ascribe this slump to factors including substantial interest rate increases, skyrocketing automobile and petroleum prices, repeated plant closures, and diminished consumer affordability.
Sales in April were down 60.5% from March, with cars of 1300cc and above experiencing an 83% decrease compared to April 2022. Smaller vehicles also suffered, with sales of 1,000cc cars and below dropping by 83% and 83%, respectively, compared to the previous year.
Furthermore, sales of buses, trucks, jeeps, pick-ups, tractors, rickshaws, and motorbikes decreased significantly compared to April 2022.
Topline Securities analyst, Sunny Kumar, stated that the April sales were the lowest monthly sales since May 2020, when lockdowns were enforced to mitigate the COVID-19 outbreak. The decline was mainly due to Ramadan’s seasonal slowdown, fewer working days due to the Eid holidays, and the lack of available completely knocked down (CKD) parts due to credit issues.
In terms of company-specific sales, Honda Atlas Car (HCAR) saw the most drastic monthly decline of 75% in April, primarily due to a decrease in sales of City and Civic models. Likewise, Pak Suzuki’s sales dropped by 74% for the same month.
Another contributing factor to the decline is the consecutive nine-month decrease in auto financing, with the March figure down by 12.83% year-on-year. Arif Habib Limited noted that auto financing, which previously accounted for 30% to 40% of total auto sales, has plummeted to zero.
