Automobile imports plunge as demand dips

25 Oct 2019

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Massive inventory of parts and accessories as well as unsold cars at showrooms and factories have piled up due to low sales.
Massive inventory of parts and accessories as well as unsold cars at showrooms and factories have piled up due to low sales.

KARACHI: Depressed demand in the auto sector has led to a drop of 27 per cent in overall import of completely- and semi-knocked kits (CKD/SKD) to $261 million in first quarter of the current fiscal year.

Of the total imports, arrival of CKD/SKD kits for heavy vehicles plunged to $67m from $114m, followed by $175m for cars from $216m and $18.8m for two-wheelers from $27m in 1QFY19.

Moreover, local auto sales fell by 39pc to 31,017 units in 1QFY20 while truck and bus sales dropped to 874 and 196 units from 2,049 and 267 units respectively.

Honda and Suzuki bike sales fell by 12pc and 11pc to 235,116 and 5,018 respectively, while those of Yamaha decreased by 1pc to 6,212 units.

United Auto Motorcycle and Road Prince Motorcycle sales also fell by 26pc and 35pc to 81,012 and 29,399 respectively; while Ravi’s sales declined by 54pc to 3,497 units.

Pakistan Association of Automotive Parts and Accessories Manufacturers Chairman Capt Muhammad Akram told Dawn on Thursday that assemblers have decreased imports of parts and accessories due to massive fall in the overall auto sector sales.

The assemblers are also perturbed over built-up inventory at their plants and dealership network due to weakening sales.

Akram said that after a bad first quarter, vehicle sales during July-October are likely to remain under pressure as this period is already called “slump time,” as buyers usually delay purchases in anticipation of buying new model in the first two months of next year.

He said that in the second quarter, sales and future sales from January 2020 onwards would also depend on political environment, crop situation, prices, and economic measures.

A Japanese auto assembler also said the massive inventory of parts and accessories as well as unsold cars at showrooms and factories have piled up due to low sales.

On the other hand, a car dealer said auto assemblers place orders for import of CKD/SKD depending on the demand from their authorised showrooms.

As sales are predicted to remain muted in the second quarter, assemblers are placing orders as per slow booking trend of locally assembled vehicles.

He said the government feels proud in controlling soaring current account deficit after negative trend in imports.

However, plunging import of raw material for the auto sector and local manufacturing is an alarming sign for the country, as it would result in job losses besides hitting government’s revenue collection.

He added that the government would also face revenue shortfall from the auto sector owing to plummeting sales.

Moreover, car sales during the last fiscal year ended lower at 209,630 units from 216,786 in FY18. Truck and bus sales in FY19 stood at 5,828 and 935 units as compared to 9,331 and 762 units.

In two- and three- wheeler segment, sales of Honda bikes fell to 1.114m units versus 1.150m in FY18 while those of Suzuki and Yamaha rose to 23,352 and 23,610 units from 21,724 and 21,810 units respectively.

Published in Dawn, October 25th, 2019