Pakistan’s car sales decline in July

Pakistan’s auto market observed a drop in car sales, including Light Commercial Vehicles, vans and jeeps, by 41 per cent to 10,435 units in July 2012, the lowest since June 2011. Conclusion of the Punjab government’s taxi scheme, termination of production of the Suzuki Alto, and prompt buying of dealers and individuals before price increases led to the downfall, said Topline Securities analyst Zeeshan Afzal. The Punjab government had allocated Rs4.5 billion in fiscal 2012 for the provision of 20,000 yellow cabs to the youth of the province. With the completion of the Punjab government’s yellow cab scheme, the country’s largest assembler — the Pak Suzuki Motor Company (PSMC) — saw sales decline by 53 per cent month-on-month. Note also that the PSMC registered zero sales for its Alto models, which have been phased out by the company. Mounting pressure from imports also dented local automobile sales: imports rose 25 per cent to 4,950 units in July 2012, and catered to 32 per cent of overall demand in the country. By comparison, share of imports in fiscal 2011 and fiscal 2012 stood at 11 per cent and 23 per cent, respectively. Other than these reasons, the month after the budget is traditionally slow for car sales, as buyers wait for tax announcements that may lead to price fluctuations. Amongst individual companies, PSMC sales declined to 5,615 units -down 51 per cent compared to June 2012 sales - while also 53 per cent below sales figures from June last year, added Afzal. The Mehran and Cultus models, both of which are PSMC’s major revenue contributors, also witnessed slowed sales by 39 per cent and 33 per cent year-on-year, respectively. Indus Motors sold 3,087 units in July 2012, down 45 per cent from 5,570 units sold in the June 2012. A major decline was witnessed in the country’s highest selling car - the Toyota Corolla — whose sales dropped to 2,464 units in July 2012, from 4,487units in previous month. The current account deficit is forecast to reach $4.8 billion or 1.9 per cent of gross domestic product (GDP). The rosy projections have been made despite the fact that the balance of payments position will remain under pressure due to external debt repayments including repayments to the International Monetary Fund (IMF). From gulftoday