KARACHI, Dec 12: For the third time in a row this year the overall sale of locally assembled cars showed a growth of 10.4 per cent during July-November 2006, compared to the same period of last year.
The decline in growth rate in car sales started in July-September this year before that the companies’ sales were rising at an astonishing rate of 20-30 per cent.
Total car sales stood at 64,996 units in the last five months (July-Nov-06) as compared to 58,849 units in the corresponding period last year. Again with the exception of few cars like--Toyota Corolla petrol version, Suzuki’s Cultus, Alto and Mehran—-sales of Honda cars and Hyundai Santro remained depressed as compared to July-Nov 2005.
However, the sale of Suzuki Liana, which has replaced Baleno this year, has started losing ground to mainly imported cars.
Honda is said to be losing market share because of change of its model to 1,800cc engine coupled with its price hike, as the price of Honda City had also surged with the introduction of new model this year. Hyundai Santro makers are now offering Rs30,000 discount on the purchase of CNG-version to clear the backlog.
Starting with sales of 670 units in July 2006, Suzuki Liana sales had surged to 761 units in August 2006, and then started falling to 655 units in September, 372 in October and 354 units in November 2006. Pak Suzuki is offering free registration and a 29-inch Sony TV in a lucky draw for the buyers of Liana.
A total of 2,379 units of Honda Civic were sold in July-November 2006 as compared to 6,080 units in the same period last year, while Honda City sales plunged to 4,857 units from 6,237 units.
Toyota Corolla sales (mainly petrol version) rose to 14,625 units as compared to 10,426 units, while Daihatsu Cuore sales also increased to 5,372 units from 3,246 units.
Suzuki Cultus and Alto sales went up to 10,209 and 8,779 units, respectively, in July-November 2006 as compared to 7,475 and 5,781 units in the same period of last year. Suzuki Mehran sales jumped to 14,425 units from 13,969 units. Hyundai Santro sales declined to 1,538 units from 2,703.
Giving an overall picture of auto industry, Chief Executive Officer (CEO) Indus Motor Company (IMC), makers of Toyota, Pervez Ghias linked the decline in sales of cars to rise in leasing/financing rates to 14-16 per cent from 10-12 per cent last year.
This was followed by strict documentary requirements and measures taken by the State Bank to lessen default cases and the availability of the used CBU vehicles at reduced costs. Because of rising interest rates, there has been reduction in auto financing business.
He said sales of certain product categories had been affected by arrival of 45,000 used cars in 2005-06. However, import of used cars are now on decline, which means that demand and supply gap has been balanced in some cases and in fact in some cases supply is higher than demand.
Mr. Ghias said that the CBU import policy has been misused by the used car importers as it was designed to facilitate the overseas Pakistanis returning home. Now it is expected that the restriction on import of vehicles more than five years old will pave way for standard vehicles.
As a result of huge glut of used cars few assemblers are operating under capacity. If equivalent number of Pakistani cars would have been sold then it would have been part of documented economy, providing job avenues etc. he added.
To a query why IMC adopted lukewarm attitude in changing models, he said the company has to follow the Toyota global model change policy and the timeframe. Time is required for new product design, sourcing and supply of parts.
He was asked to elaborate on why the assemblers receive huge money from customers in terms of advance booking and keep the same for many months. Even the annual accounts of Toyota Motors 2005-06 showed an amount of Rs6.6 billion received from customers in advance booking.
Pervez Ghias explained that keeping the full amount of money deters potential investors as they can only book a few number of vehicles on the reduced cost. If the companies accept partial payments then they will book more cars and the end-users will have to wait for a longer period.
He added that the companies pay interest amount on waiting period of more than 60 days and the refund facility is available to customers booking cars through dealerships.
