Car Sales Hit Hard with 50% Decline Due to Poor Demand

Jawad

14 Nov 2023

264

Car Sales Hit Hard with 50% Decline Due to Poor Demand

Pakistan witnessed a significant downturn in car sales, with figures reaching 6,200 units, reflecting a 26 percent decrease month-on-month (MoM) and a substantial 54 percent decline year-on-year (YoY). This concerning trend extended beyond PAMA (Pakistan Automotive Manufacturers Association) members, encompassing approximately 7,000 units, down 26 percent MoM and 53 percent YoY.

Factors Influencing Month-on-Month Decline

The MoM drop in car sales is primarily attributed to disruptions in the supply chain, coupled with diminished demand. Topline Securities, in its sector review, highlighted additional factors such as soaring car prices, expensive auto financing, and the weakened purchasing power of consumers as contributors to the decline in YoY sales.

4MFY24 Performance Overview

During the first four months of fiscal year 2024 (4MFY24), PAMA reported a considerable dip in car sales, totaling 27,163 units, marking a 44 percent YoY decrease compared to the corresponding period in the previous fiscal year, which recorded 48,573 units.

Performance of Major Car Manufacturers

Honda Car (HCAR) and Indus Motors (INDU) emerged as the worst performers, experiencing a 66 percent MoM and 34 percent MoM sales decline, respectively. This drop was attributed to plant shutdowns caused by inventory shortages. Meanwhile, Pak Suzuki (PSMC) reported 3,810 units sold, a 10 percent MoM decrease in October 2023. Hyundai faced a 54 percent MoM decline, with the newly launched Santa FE contributing 175 units to October's sales figures.

Tractor Industry Dynamics

In the tractor industry, Al-Ghazi Tractors (AGTL) and Millat Tractors (MTL) saw declines of 5 percent MoM and 49 percent MoM, respectively, in October 2023. Despite this, the total tractor industry sales for 4MFY24 amounted to 17,296 units, reflecting an 87 percent YoY increase, largely attributed to the low base of the previous year amid floods.

Motorcycle Sales Challenges

Bike sales faced challenges as well, with a 5 percent MoM and 11 percent YoY decline in October 2023. Atlas Honda (ATLH) reported sales of 90,000 units, down 5 percent MoM and 5 percent YoY. The total industry sales for 4MFY24 reached 371,000 units, marking a 10 percent YoY decrease due to elevated bike prices and the constrained purchasing power of consumers.

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