PAGE Blog Business Weekly Magazine
Since the introduction of car leasing and financing, vehicle sales in Pakistan have increased several times. All of this started in the beginning of this century as these loans made it easy for people to buy new or even used cars. This also sprung up new business like rent-a-car and renting cars became a cheaper and more viable business option. That’s the time when Pakistan’s automobile industry was booming but all of this came to a standstill when the world saw the financial crisis.
Financial crisis was not so prominent in Pakistan but the countries, which own most of the automobile industry faced big losses and this resulted in increased prices. As the prices started to increase, Pakistan’s automobile sales declined. The sales numbers started improving from 2012 onwards. In March 2015, Pakistan automobile industry broke the record for most number of cars sold in a single month ever. According to the reliable sources, car sales in Pakistan will be higher than they have been in the last five years. Likewise other reports say that sales will be over 165,000 in 2015.
State Bank of Pakistan move to reduce interests from 10 to 7 per cent might also have had something to do with improved vehicle sales. The 3 per cent decline was enough to bring more consumers towards buying new cars. All of these factors combined, helped strengthen the local automobile industry and car sales numbers by about 30 per cent year-over-year. May be this is one of the reasons that Volkswagen has shown interest in entering Pakistan. There was long-lasting demand and the car sales climb 30 per cent year-on-year. With the greatest number of cars being sold in the country within a month, three cars contributed to this, namely the Toyota Corolla, the Suzuki Bolan and the Ravi. The sales of the latter two automobiles doubled during 2015.
Pakistan local car assemblers have consistently registered healthy growth in vehicle sales (including light commercial vehicles (LCV), vans and jeeps) on the back of new model of Toyota Corolla, taxi scheme of Punjab government, and an increase in car financing due to 42-year low interest rates in the country. Local car sales in the first 11 months (Jul-May) of fiscal year 2015 have jumped to 162,151 units, up 30 per cent year-on-year, according to Pakistan Automotive Manufacturers Association (PAMA) data.
Healthy growth in auto sector is indicative of increase in per capita income, improved farmer economics and overall recovery of the economy. Car financing is also picking up gradually (currently estimated at 30 per cent versus 5 per cent few years back.
The government’s decision to maintain GST at 10 per cent in the current federal budget fiscal year 2016 will support the growth momentum in tractors volumes. In the fiscal year 2015 local car assembler sales will grow by 30 per cent to 177,825 units while 37 per cent growth in tractors sales is also expected.
Amongst individual companies, Pak Suzuki Motor sales increased by 64 per cent year-on-year to 11,477 units in May 2015. In 11 months of fiscal year 2015 Pakistan Suzuki sales rose to 89,084 units versus 69,866 units in the same period last year.
Indus Motors sold 5,507 units in May 2015 compared to 2,917 units in the same month last year. During 11 month year 2015, Indus Motors sales increased 58 per cent year-on-year to 51,485 units. Honda Atlas Cars sold 2,353 units in May 2015 compared to 2,260 units in the same month last year. Honda Atlas Cars sales have remained stable at 21,134 units in 11 months fiscal year 2015 versus 21,002 units in the same period last year.
The shining online vehicle platform
Carmudi, the country’s number one dedicated online vehicle platform, made its presence known at the 2015 Manila International Auto Show last April 9 to 12. This was the second time that the online car portal showcased their brand in the event that is dubbed as the “largest gathering of car enthusiasts in the country.”
“This year’s MIAS serves as a barometer on how well Filipinos has received the website in terms of helping them buy or sell their cars,” said Carmudi Philippines managing director Subir Lohani. “We take this an opportunity to measure our brand’s engagement and to reach out to more customers. Those who are curious can also get to see the people behind those who run our website and even ask them questions relating how to use our site and app to its fullest.”
The company was founded in January 2013, and in just under a year and a half, Carmudi has rapidly scaled to 20 countries across Asia, Africa, Middle East, and Latin America. In the Philippines, the platform officially started in January 2014. When it joined the 2014 MIAS, few people knew the start-up company. Today, however, it is considered as the most-used vehicle marketplace for Filipinos with close to 25,000 cars, motorcycles and commercial vehicle listings – brand new or used. “Trust is key at Carmudi,” Lohani added. “We work with a committed team of local experts that ensure regular quality checks on the cars on our platform and update our inventory regularly to avoid fraudulent listings.”
When considering the unjustified profit margins of the local auto industry and the increasing trend to import used cars, the news is certainly amazing. Perhaps if the local manufacturers justified their prices and used the advanced tech used in international models, Pakistan would see even greater vehicle sales and fewer imports of used vehicles.
Attractive new designs
In March 2015 alone, Pakistan automobile industry broke the record for most number of cars sold in a single month ever. March saw a 72 per cent increase in local vehicle sales according to Pakistan Automotive Manufacturer’s Association (PAMA). If the sales continue at this rate, Pakistan might even see the biggest car sales numbers in a year.
One of the major factors for increased sales in 2015 is quoted to be the Toyota Corolla 2015, which brought a long-due new design to the vehicle. Another reason for increased sales is the Suzuki Bolan. The scheme makes it easier to buy Suzuki Bolan and Ravi. Both of these vehicles have seen their sales doubled during 2015.
When considering the unjustified profit margins of the local auto industry and the increasing trend to import used cars, the news is certainly astounding. Probably if the local manufacturers justified their prices and used the advanced tech used in international models, Pakistan would see even greater vehicle sales and fewer imports of used vehicles.
Company wise data in the month of March 2015 showed that Pak Suzuki Motors (PSMC) posted record sales of 12,982 units in March 2015, up 117 percent year on year. These figures also include around 5,100 units under taxi scheme launched by Punjab government. However, if these taxi numbers are excluded, PSMC sales still remain high by 73 per cent as compared to last year. Sales of Indus Motors (INDU) and Honda Atlas Cars (HCAR) stood at 5,766 units up 42 per cent year-on-year and 2,364 units up 20 per cent YoY respectively.
Cumulative sales during ninth month of fiscal year 2015 stood at 1, 24,000 units compared to 100,000 units sold last year, up 24 per cent, while if taxi scheme data, which was launched in February 2015, is excluded, sales growth would be around 19 per cent.
Company wise figures showed that sales of PSMC stood at 67,000 units during 9 month fiscal year 2015 up 21 per cent year-on-year, while INDU and HCAR sales 40,141 units and 16,405 units, up 50 per cent year-on-year and down 2.0 per cent YoY.
It is believed that Jan-Mar 2015 earnings of local auto assemblers will be impressive on the back of revival in local car demand. Highest sales growth is witnessed in PSMC as sales of the company stood magnificent at 31k units, up 55 per cent year-on-year (excluding taxi sales up 30 per cent year-on-year) followed by INDU (sales up 50 per cent year-on-year) and HCAR (sales up 15 per cent year-on-year).
