Local auto sales down 46 percent in FY09

[LahoreEstate]

By Moonis Ahmed

KARACHI: As the macroeconomic indicators are getting better and the economy is on the path of recovery the fiscal year 2009-10 may witness better for the wavering auto industry that has been suffering from sagging conditions since last two years, industry officials told Daily Times.

Continued decline in the steel prices in international market and the expected decline in the interest rate would help manufacturers to reduce the prices, they added.

Car sales during first 9MFY09 has dropped by 49 percent year-on-year (YoY), as it stood at 61,185 units as compared to 120,246 units in the same period of the last year, with Pak Suzuki and Dewan Motor among the major losers as both witness sales decline by 52 percent and 76 percent, respectively, figures released by the Pakistan Automotive Manufacturers Association (PAMA) show.

However, cumulative auto sales (Cars + LCVs) recorded depressing numbers for 9MFY09 as they stood at 73,668 units depicting a decline of 46 percent YoY.

Auto sales were up 15 percent MoM in March 2009 primarly at the back of low base effect from February 2009 (only 23 working days). Honda Atlas and Pak Suzuki were amongst the major gainers as their sales increased by 36 percnet and 21 perecnt, respectively. Moreover, Dewan Motor also showed some improvement with sales up 26 percent MoM. However, Indus Motor failed to post positive growth as their sales declined by 2 percent.

After an impressive start in January-09 where MoM sales were up by 95 percent, February-09 auto sales slid by 18 percent MoM to 6200 units, but now in March 2009 the car sales have increased by 14 percent to stand at 6,525 units.

"Political and economic instability, frequent increase in car prices by manufacturers and high rates of auto financing remained the main sources for this decline," Atif Zafar, analyst at Jahangir Sinddiqui Research told Daily Times.

He said that the next fiscal year could be a better one for the auto industry as besides, positive macroeconomic indicators, government is also going to check the unjustified increase rates by the manufacturers.

In 9MFY09, Indus Motor captured significant market share at the expense of Pak Suzuki largely on account of their succesful launch of new Corolla model during the period. Indus Motor's market share increased to 31 percent from 25 percent in June 2008 while Pak Suzuki's market share fell to 54 percent from 61 percent. Similar to Indus Motor, launch of new Honda City helped Honda Atlas Car substantally increase its market share to 12 percent from 8 percent earlier.

Sales of automobiles have been falling for more eighteen months now owing mainly to the increased rates of interest charged on loans. Besides, the 25 percent high inflation has pushed many potential buyers away.

Automobile manufacturing had boomed when interest rates were low thanks to the increased liquidity available with Pakistani banks after the 9/11 attacks. Banks and leasing companies were liberal in giving loans to individuals. Now, as the numbers of defaults are rising because of increased interest rates, they have tightened their policies. Many banks have even stopped auto financing. There has been hardly any advertisement for car loans on televisions and newspapers for sometime.

http://www.dailytimes.com.pk/default.asp...2009_pg5_2