Pakistani local car assemblers posted 35 per cent growth during 9 months of the current fiscal year (July-March 2015-16) on the back of rising auto financing on 42-year low interest rates and improving law and order and overall economic situation during the last few months.
The sales of local vehicle including LCVs, Vans and Jeeps stood at 166,898 units compared to 123,638 units made in Pakistan during the same period last year, data released by Pakistan Automotive Manufacturers Association (PAMA) revealed on Monday.
The analysts said, “the main reason behind rising auto sales and productions is the frequent auto financing by the local banks and lowest interest rates in last six months.” This trend in auto industry will continue if the interest rates remain on the same level or decline further in future, the analyst said.
The central bank has maintained its interest rates for the next three months.
Among individual companies, Pak Suzuki (PSMC) sales increased by 51 per cent year on year (YoY) to 100,663 units in July-March 2015-16 primarily due to Punjab government’s Taxi Scheme.
In the first month after completion of the taxi scheme, the volumes decreased by 30 per cent YoY or up 8 per cent on month-on-month basis in Mar 2016 to 9,055 units.
Indus Motors (Indus) sold 47,504 units in nine months 2015-16 versus 40,141 units during the same period of 2014-15. In Mar 2016, Indus sales remained flat on year-on-year basis at 5,781 units.
On MoM basis, sales increased by 10 per cent due to fewer working days in February compared to March.
It is important to note that delivery time for the new Corolla model still ranges between two and four months depending on the variant.
Honda Cars (HCAR) sold 18,542 units during the first 9 months of 2015-16 compared to 16,405 units during the same period last year. In March 2016, Honda sold 2,749 units, up 16 per cent YoY (27% MoM). Honda City remained the major contributor in this growth, the analyst said.
Volumes of Honda Civic are expected to further dry out in the coming months in anticipation of the new model launch in the second half of 2016.
Pakistan’s tractor segment posted a decline of 33 per cent year on year during the 9 months of 2015-16 to reach 22,169 units. This decline is because of the delay in the launch of the provincial tractor subsidy schemes. Punjab and Sindh governments in announced subsidy of 25,000/29,000 on every tractor in the 2015-16 budget. But neither of the companies has started paying subsidies to these companies.
But Millat tractors (MTL) and Al-Ghazi tractors (AGTL) witnessed a decline in their volumes during the period. While the farmers are waiting for the execution of the announced subsidy schemes by the Punjab and Sindh governments, tractor manufacturers are requesting the government to either execute or shelve the announced scheme so that farmers resume their normal purchasing.
MTL sold 13,534 units in the first 9 months of 2015-16 compared to 19,970 units during the same period last year. Company sales decreased by 1 per cent YoY to 2,550 units in March 2016. However, it seems that farmers have resumed their normal purchasing as sales increased by 41 per cent in March 2016.
During three quarter of the year, AGTL witnessed a decline of 37 per cent YoY in its sales to 7,947 units. The company sold 1,808 units in March 2016, down 12 per cent YoY (59% MoM).
Trucks and buses sector has posted an increase of 42 per cent YoY to reach at 4,451 units during the first 9 months of 2015-16.
Muhammad Tahir Saeed, analyst at Topline brokerage house, attributed this surge in demand to China Pakistan Economic Corridor projects and improving law and order situation in the country.