Car sales increase by 15 percent on yearly basis

[Naveed Yaseen]

By Moonis Ahmed
KARACHI: The consumers interest for buying new cars helped the struggling car sales to increase by 25 percent in month of October 2009 as compared with last month, data released by Pakistan Automotive Association said Wednesday.

According to the association data, units produced during the month of October stood at 11,359 as compared with 8,110 units in September 2009. The production remained up by 40 percent during the month.

However, on year-on-year basis (Y-o-Y) the car sales during July-October registered an increase of 15 percent to 37,922 units as compared with 32,833 units last year. The overall car production during 4MFY10 was up by 8 percent to stand at 37,081 units as compared with 34,308 last year.

In car sales segment the 1300cc category Honda Civic sales remained depressed as it was down by 9 percent and production was also down by 36 percent during July-October 2009. Toyota Corolla production was up by 138 percent and sales remained buoyant with 167 percent growth in the said period.

In 1000 cc category the sales of Suzuki Cultus was down by 16 percent and production was also down by 20 percent.

Other segments showed mix trends as busses and trucks sales were down by 11 percent amid 12 percent production decline. However, tractors showed positive movement as sales improved by 20 percent and production by a whopping 33 percent during the said period.

In Motorcycles and three-wheelers the sales and production remained same with both increasing by 33 percent.

“Strong agriculture income and low base effect has resulted into 7 consecutive higher month-on-month auto sales,” he said. However, he added that weak October sales were due to slower-than-expected recovery in demand.

He further said that auto sales are likely to remain depressed in the near-term. As a result, FY10 YoY growth is expected to remain at 12 percent compared with 13 percent YoY growth realised in 1QFY10.

Moreover, sharp appreciation of yen against rupee (9 percent since the start of FY10) is a major concern for car assemblers. Cost pressure is also likely to aggravate due to weak dollar and in turn higher steel prices, analyst said.

High inflation (+10.67 percent YoY) and the slowdown in auto financing continues to have a breaking effect on auto sales. Furthermore, auto sector profitability is expected to come under further strain through the rising Yen and USD, which increased by 29 percent and 11 percent, respectively against rupee (on average basis during Jul-Oct 09 YoY).

Auto demand from the government institutions and corporate sector would support the auto sales going forward, the analyst believed. However, lower base-effect would also persist during rest of FY10, therefore a 25 percent YoY growth in car sales to 104,00 units in FY10 is expected.

It may be mentioned that taking advantage of this increase in recent car sales, the assemblers had raised their prices by almost Rs 30,000 to Rs 35,000 in previous month.

After increase in car sales during 4MFY10 re-hiring of sacked skilled manpower in the auto vending industry has also started.

Around 50,000 had lost jobs in the last fiscal year mainly in the organised vending industry on persistent fall in sales due to high prices, rising car financing, uncertain economic and political situation.

However, about 20 per cent work-force, mostly old skilled workers, has resumed jobs after growth in car sales in the last few months, said a representative of PAMA.

Car sales have increased after cut in car prices following removal of five per cent federal excise duty on above 800cc in the budget 2009-10, decline in car imports and strengthening consumer confidence.

http://www.dailytimes.com.pk/default.asp...2009_pg5_5