Car sales decline 51% to 13,000 units amid soaring prices

Car sales

Car sales in September 2022 decreased by 51% from the same month the previous year as a result of consumers’ restricted spending capacity and rising car prices. 

According to Sunny Kumar, an auto analyst at Topline Securities, “auto sales are down by 51% to 13,000 units – including the sale of Non-PAMA (Pakistan Automotive Manufacturers Association) members – year over year, amid rising car prices, costly auto loans, and poor consumer purchasing power.” 

With 34,472 units sold in the first quarter of fiscal year 2023, which is a fall of around 50% from the previous first quarter of fiscal year 2022. There were 68,897 units were sold in previous year. 

According to Kumar, “all companies reported a decrease on a month-over-month basis, with the exception of Pak Suzuki (PSMC), whose sales were up by 52% month-over-month due to low base as plant closure amid the lack of completely knocked down (CKD) parts resulted in sales of 3,954 units in August 2022. 

In September 2022, auto makers were unable to produce any vehicles due to a lack of CKD parts, which caused a 7% month-over-month decline in Pakistan automobile sales, according to Kumar. 

Read more: Car sales declined 58% to just 11,883 units in July 2022

Meanwhile, Tahir Abbas, Head of Research at Arif Habib Limited (AHL), stated that “monthly auto sales, including those of cars, light commercial vehicles (LCVs), vans, and jeeps, plummeted to a 27-month low of 11,000 units during September 2022.”. 

According to Ali Asghar Jamali, CEO of Indus Motor Company (IMC), “Production halts owing to restrictions on CKD imports and fall in demand due to the flood damage may result in a volume reduction of up to 50%.”. 

Since taxes make up 39% of a car’s price, the government stands to lose almost $1.5 billion as a result of the decline in sales and manufacturing, he said. 

Indus Motors reported that its monthly sales fell by 32% from 3,876 units in August 2022 to 2,617 units in September 2022.  

On the other hand, Honda Atlas Car also saw a fall of 29% month over month to 1,280 units in September 2022, pushed mostly by a 79% month over month decline in BRV sales. 

“We recognize that the economy requires drastic measures owing to a number of regional and global factors, and we support the steps taken by the federal government. However, since the auto sector contributes merely 3% to the total import bill, restrictions on CKD imports will not help in reducing the current account deficit,” explained Jamali. 

Instead, he highlighted that, “these import prohibitions are having an impact on Pakistan’s domestic vendor economy and the three million direct and indirect workers employed in the auto industry.” 

“Since not all imports are of the same kind, authorities must classify imports. The Indus Motors CEO said that while imports of luxury products should be limited, imports of CKD kits for domestic vehicle production should be permitted. 

According to him, the largest contributions to the current account deficit, which is a startling $27 billion, are imports of food and petroleum. Even though sales were at an all-time high last year, the auto industry only contributed $2.25 billion to the import bill. 

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