Auto sales plummet due to supply constraints
Pakistani car sales, including sales of non-members of the Pakistan Automotive Manufacturers Association (PAMA), reached 14,000 units, down 46% in August 2022 from the corresponding period last year. This comes amid escalating car prices, expensive auto financing and weak consumer purchasing power.
“The decline was primarily due to the unavailability of Complete Knocked Down (CKD) kits which resulted in days of non-production by automakers,” explained Sunny Kumar, deputy director of research at Topline Securities. “In order to save foreign exchange reserves, car manufacturers were only allowed to import 50% of their average imports over the last four months until July 2022. The quota was increased to 60% for August 2022 and 70% for September 2022,” he added. .
Compared to the previous month of the same year, auto sales fell 2% in August 2022. This brings car sales in the second month of fiscal 2023 to 23,498 units, down 50% from year-on-year compared to 46,656 units in the same period last year.
Automotive analyst Arsalan Hanif noted: “The decline in auto sales on a monthly and annual basis is due to supply constraints on key raw materials caused by the restrictions, as companies must obtain prior authorizations for imports. “.
“As a result, original equipment manufacturers (OEMs) were unable to operate at full capacity and the largest OEM (Pak Suzuki) extended the closure of its automotive plant due to lower inventory levels. “, he added. “In the past, the State Bank of Pakistan (SBP) had imposed restrictions on the import of CKD kits, but even now car manufacturers are finding it difficult to clear their import consignments,” Asad Ali said. , automotive analyst at Al Habib Capital Markets. .
“As a result, Indus Motors closed its plant for 13 days in August due to insufficient inventory levels to maintain production activities. Similarly, Pak Suzuki closed its plant from August 18, 2022, citing similar reasons” , did he declare.
According to Topline Research, “Pak Suzuki Motor Company (PSMC) sales were down 41% month-over-month to 3,954 units in August 2022 due to the plant shutdown due to the unavailability of CKD parts”.
Honda Atlas Cars (HCAR) also posted a 29% month-on-month decline to 1,809 units in August 2022, driven by a 40% month-on-month decline in City and Civic sales. other.
Indus Motors (INDU), however, reported a 63% month-on-month sales increase to 3,876 units in August 2022. By comparison, total sales in July 2022 were 2,375 units, a said Kumar. Hyundai sales also increased to 1,929 units in August 2022 from 201 units in July 2022, driven by an increase in Tucson sales mainly due to a weak base.
Insight Securities automotive analyst Ali Asif said, “We believe volumetric sales are likely to remain weak going forward as the automotive industry struggles to secure Letters of Credit (LCs).”
Among tractors, Millat Tractors (MTL) saw an increase of 153% month-on-month and 27% year-on-year to reach a sales figure of 2,556 units. Al Ghazi Tractors (AGTL) recorded sales of 1,420 units, up 14% month on month and 9% year on year, according to Topline Research.
Pakistani bike sales were up 5% month-on-month but down 32% year-on-year in August 2022. Atlas Honda (ATLH) recorded sales of 85,000 units, up 6% month on month but down 15% year over year.
Published in The Express Tribune, September 14e2022.
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