KARACHI, Oct 10: Sales of locally-assembled cars surged by 10 per cent to 40,044 units during the first quarter of this fiscal year as compared to 36,242 units the same period last year, but market pundits say the sales are showing slow growth over previous year owing to rising car financing rates.
According to figures compiled by Pakistan Automotive Manufacturers Association (PAMA), sales of Indus Motors (makers of Toyota and Daihatsu cars) rose by 48 per cent to 12,314 units as compared to 8,328 units while sales of Pak Suzuki Motor Company posted an increase of 21 per cent to 27,765 units from 22,978 units.
Sales of Honda Atlas Cars and Dewan Farooqui Motors Limited showed a negative growth which made an impact in the cumulative sales of all the assemblers. Honda sales fell by 43 per cent to 4,640 units from 8,184 units while sales of Dewan Motors dipped to 2,331 units from 3,102 units.
“The growth in car sales has started dampening down as it had been growing in the range of 25-30 per cent in the previous years,” observes Mohammad Suhail of Jehangir Siddiqui Research.
He attributed the slowdown in sales to rising car financing rates and the heavy import of used cars to fill up the demand and supply gap during the previous fiscal year.
The increase in interest rates had started making a negative impact on the sales of cars especially in higher engine capacity cars, he said, adding that it appeared penetration of cars in the Pakistani roads had reached a saturation point.
Also, there had been stability in the country’s economic growth as compared to boom period in the previous year. “I think that sales will remain in double digits in coming months but it may not maintain pace of previous years,” Sohail said.
Market analysts think that the bubble of imported used cars has burst as dealers are now offering these cars below the cost to clear the pile-up stocks of 30 per cent out of total import of over 45,000 units in 2005-06 that are still parked at showrooms.
Besides, poor re-sale value and problems in getting their parts have opened the eyes of the genuine buyers who had become wild for these cars without having any market knowledge.
In early months of last fiscal year, dealers had made windfall by selling used cars at higher rates in view of rising demand. Those dealers who had initially made quick money had sidelined themselves from this business now, while new entrants were facing problems and were suffering losses.
In locally-assembled cars only those cars bode well which enjoy good re-sale value, availability of parts at affordable rates and mostly available with factory fitted CNG in engine capacity of 800-1,000cc engines.
Honda cars are facing problems because of higher prices and it is not available in factory fitted CNG. Honda’s older models in the market have already lost both cash value and re-sale value.
Car market is abuzz with reports that Indus Motors is planning to launch Toyota Corolla XLI CNG in order to compete with Suzuki Liana CNG version.
However, Director Corporate Planning and Customer Relations of Indus Motors, Shah M. Saad Hussain said that the company currently did not have any plans to launch XLI CNG.
