Auto import up 166% in April

[Lahore_Real_Estate]

* PAMA says significant high import drags down car sales

KARACHI: Taking full advantage of relaxation in auto import policy given by the government, local dealers have taken auto import to an unprecedented high level that recorded an increase of 166 percent in April 2011 as compared to the previous month of March, Daily Times learnt on Monday.

According to the latest numbers released by Pakistan Automotive Manufacturers Association (PAMA), car sale has declined by a notable 6.0 percent on yearly basis. The main reason for the decline in local auto sales is the rising share of import post the relaxation of the auto import policy in late December by the government.

As a result, auto imports in April stood at 1,799 units as against 676 units in March, reflecting a rise of 166 percent. The average monthly sales during January-April 2011 have augmented to 1,070 units, compared to average monthly sales of 274 units in FY 2010.

While car sales declined in May, an increase of 23 percent on yearly basis in sales of [large commercial vehicles (LCVs)] largely mitigated the impact of the decline in industry’s overall auto sales (down 1.0 percent). However on monthly basis, auto sales plunged by 5.0 percent.

The decline was largely expected owing to production cuts suffered by the local auto assemblers coupled with relaxation in the auto import policy by the government, Atif Zafar, an analyst said.

“Another decline of 20-25 percent is expected in the month of June in anticipation of 3.0 percent decline in auto prices from July 1 (thanks to the removal of 2.5 percent special excise duty and a cut of 1.0 percent in general sales tax),” he added.

Although, auto sales declined by a nominal 1.0 percent on yearly basis, the Indus Motor (INDU) and Honda Car (HCAR) witnessed substantial falls of 15 percent and 37 percent, respectively on yearly basis.

The decline in INDU was a consequence of the company suspending booking of its vehicle on April 20, 2011 for a period of 22 days due to supply side issues resulting from the earthquakes in Japan, while HCAR too witnessed significant production disruptions for the same reason.

On the other hand, Pak Suzuki (PSMC) sales increased by a substantial 20 percent on yearly basis. He said that the abnormal growth in sales of PSMC is because of the backlog of booking for its CNG-fitted vehicles. It may be mentioned that the company had earlier halted booking of its CNG-based vehicles due to suspension of its supplier’s licence by the authorities.

The analyst believed that the auto sector might remain in the red zone on the back of increased regulatory risks and continuous rise of Japanese yen against the rupee (up 5.0 percent QTD). However, the Punjab government’s allocation of Rs 4.5 billion to provide 20,000 yellow cabs is likely to act as a major catalyst for PSMC.