Bike sales skid as economic slowdown bites

Updated September 20, 2019

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Bike sales showed contrasting trend as some assemblers, after enjoying a good FY19, faced precarious sales during the first two months of FY20 while for many manufacturers the current fiscal year is almost as volatile as the preceding one. — APP/File
Bike sales showed contrasting trend as some assemblers, after enjoying a good FY19, faced precarious sales during the first two months of FY20 while for many manufacturers the current fiscal year is almost as volatile as the preceding one. — APP/File

KARACHI: Bike sales showed contrasting trend as some assemblers, after enjoying a good FY19, faced precarious sales during the first two months of FY20 while for many manufacturers the current fiscal year is almost as volatile as the preceding one.

The country’s total bike production fell by 13 per cent to 2.459 million units in FY19 from 2.825mn units in FY18, showed Pakistan Bureau of Statistics (PBS) data.

Amid claims of achieving 94pc localisation in 70cc segment and over 50pc in higher engine power, the assemblers had given multiple price shocks to the consumers in the last one and half years blaming high cost of imported parts and raw material on falling rupee value against the dollar to Rs158 from Rs123 in August 2018 and Rs110 in January 2018.

The 70cc holds 70-80pc share in total bike market Atlas Honda Ltd (AHL) did not lose much of its customers as its sales slightly fell to 1.114 million units in FY19 from 1.150m units in FY18. However, sales during July-August 2019 came down to 160,109 from 170,021 units in same period 2018.

Suzuki and Yamaha sales declined to 3,162 and 3,805 units in July-August from 3,738 and 4,282 units respectively. Suzuki and Yamaha sold 23,352 and 23,610 units in FY19 as compared to 21,724 and 21,810.

United Auto Motorcycle, with already dismal sales of 364,614 units in FY19 versus 405,982 units in FY18, could not recover at the start of FY20 and sold 52,379 units in July-August as compared to 68,858 units in same period last year.

Data of Pakistan Automotive Manufacturers Association reveals sales recovery by some assemblers in August from July, but the volumes during July-August 2018 were still far healthier than the same months of this year.

“I have reduced overall manpower (permanent, daily wage and contractual) by 10-15 per cent from January to curtail financial burden on account of falling sales,” said Sohail Usman, Director Road Prince Motorcycle.

He said “people with monthly income of Rs25,000-40,000 have reduced their spending owing to rising grocery prices and utility bills.”

Buying of bikes on a monthly instalment basis, which makes up 60pc of the total two-wheeler sales, is also getting slow following surge in bike prices as people find it tough to make timely payments.

The issue of sales tax registration of dealers under Third Schedule effective from July 1 also affected Chinese bike sales as dealers stopped lifting bikes from the assemblers.

On recovery in sales of Road Prince bike in August to 11,235 units from 4,827 units, he said last year average monthly sales were 16,000 units, which dropped by 30pc drop.

Despite recovery in August sales, Road Prince sales plummeted sharply to 16,062 units in July-August from 28,181 units in same period last year. In FY19, sales plunged to 161,231 from 219,349 units in FY18.

Former chairman Association of Pakistan Motorcycle Assemblers (APMA) Mohammad Sabir Sheikh said rising food prices have hit low income buyers’ sentiments who cannot afford bikes on ready cash.

He said bikes selling out through instalment has also slowed down in the last six months as many buyers face problems in paying monthly instalment of Rs3,000-5,000 per month on 70cc-125cc bikes out of their monthly salary of Rs25,000-35,000 per month.

As a result, they sell back their bikes back to the dealers, he added.

He said Chinese assemblers have mainly faced low sales problems owing to non-registration of their dealers in sales tax.

A Japanese bike assembler attributed depressed sales to the country’s overall economic slowdown. “I hope sales will improve from October depending on various crops’ production.”

He said sales tax registration issue of dealers had not hit Japanese bike assemblers as majority of their dealers are registered in sales tax.

Honda CD 70cc and CG 125cc now cost Rs74,900 and Rs124,500 as compared to Rs69,500 and Rs114,500 earlier this year. Suzuki GD110S, GD 150, GD150SE and GR150 now sell at Rs166,000, Rs175,000, Rs191,000 and Rs259,000 as compared to Rs155,000, Rs162,000, Rs180,000 and Rs243,000 earlier this year.

Published in Dawn, September 20th, 2019