KARACHI, July 12: Consumers’ passion for new cars remained volatile in the last fiscal, thus pushing up car sales by 32 per cent during 2004-2005 to 127,309 units as compared to 96,674 units in 2003-2004.
Car production in 2004-2005 jumped by 28 per cent to 126,403 units from 98,461 units in 2003-2004, figures released by Pakistan Automotive Manufacturers Association (PAMA) reveals.
Faraz Farooqui of Jehangir Siddiqui Research attributed the rising sales to extensive car financing schemes, significant influx of capital into the country and increase in consumer wealth due to economic turnaround.
He expects local car sales to maintain the growth momentum, touching to 150,000 units in 2005-2006, up by 18 per cent from 2004-2005.
He says that the government has announced duty cut in new budget in the range of 5-25 per cent on 1,600cc and above cars. The impact of duty will not be significant on local car makers as duty structure on popular 1,300cc and below segment has remained unchanged.
However, the share of imported cars will increase as local car makers have also started importing cars and will try to benefit from that also, he added.
Sales of Indus Motors rose by 20 per cent to 34,983 units in 2004-2005 from 29,113 units. Pak Suzuki sales stood at 75,720 units compared to 57,559 units while sales of Dewan Motors went up by 33 per cent to 15,999 units from 12,031 units. Sales of Atlas Honda during 2004-2005 posted an 80 per cent surge, reaching to 24,066 units from 13,368 units.
Despite impressive sale figures and double shift production by all the assemblers, problems of late deliveries and high premiums on locally assembled cars remained a hot issue for the genuine buyers. These issues are likely to loom large in the new fiscal too as demand for cars are still higher as compared to current production of cars. There is still a gap of 40,000-50,000 cars between demand and supply.
However, consumers will witness a wide range of used cars as the government has increased the depreciation allowance from one to two per cent on used car imports under baggage, transfer of residence and gift scheme.
A leading assembler said that the arrival of used car would seriously threaten the local assemblers as well as the vendor industry besides creating a stiff competition between locally assembled cars and imported cars.
“I think import of used cars will grab 20 per cent share in the market during the new fiscal,” the assembler said.
However, assemblers have affirmed their commitment to on-going investment and expansion projects aimed at raising the production to meet the rising demand. “We are committed to accomplishing the investment and expansion plans which we have already decided ahead of the new budget,” the assembler said adding that the industry will think about the future plans.
Sources in the car industry said that the government officials in various meetings with vendors and assemblers had flatly refused to reverse the decision regarding increase in depreciation allowance on used car imports. Sources said that the government would monitor the situation for at least next six months whether the decision would help in bridging the gap of demand and supply.
Other sectors also performed well in which sales of motorcycles (Honda, Yamaha, Suzuki, Sohrab, Triwheeler, Qingqi) jumped to 417,066 units in 2004-2005 from 301,746 units in 2004-2004. Honda remained the market leader whose sales touched 287,172 units from 190,424 units in 2003-2004. The production and sale data of over a dozen Chinese bike manufacturers, who are not members of PAMA, is not included otherwise the total sales figures would have crossed over 500,000 units in 2004-2005. The entry of Chinese bikes has fuelled the buyers’ passion because of cheap price factor and its entry has also forced the Japanese players to bring down the prices.
Sales of trucks (Hino, Nissan, Dong Feng, Master and Isuzu) rose to 3,345 units from 1,868 units in 2003-2004, showing that the economic activities remained brisk and movement of cargo (import and export) also improved. Similar reasons can be linked to the increase in sales of light commercial vehicles (LCVs), whose sales peaked to 25,056 units from 14,933 units.
Sales of farm tractor (Fiat and Massey Ferguson) also recorded a rise to 43,578 from 35,900 units.
Sales of buses (Hino, Nissan, Dong Feng, Master and Isuzu) rose to 1,605 units from 1,363 units due to increase buying from the transporters for plying buses under urban transport schemes.
