FY12: Record auto sales
Signing off with a flourish, automotive sales at the end of the year remained positive with a significant increase in unit sales of cars, light commercial vehicles (LCV) and Jeeps; which rose to 179,000 units, representing an increase of 22 percent over FY11. Industry sales soared to the highest figure in four years with sales of LCVs and pickups soaring 15 percent month-on-month to 19,156 units, abetted by pre-buying by consumers in anticipation of the price hikes expected as a result of Euro-II compliance by manufacturers. Amid stiff competition from exports and the steep depreciation of the local currency, statistics released by PAMA establish that the major players in the industry managed to achieve illustrious growth during FY12. Pak Suzuki mustered up a hefty 40 percent year-on-year growth as a result of Government of Punjabs Taxi Subsidy scheme with year-end sales standing at 112,157 units as compared to the 79,941 units sold during FY11. Indus Motors also managed to record a 9 percent growth over last year aided by a steady demand for their sedans throughout the year. INDUs newly launched Vigo Champ; which gained a 156 percent growth in sales from April to June 12 was another factor that played out into increased sales volume for the manufacturer. The impressive sales growth at the end of FY12 which came as a consequence of deferred sales due to special tax structure concession announced in the budget and a considerable increase in remittances which rose to $13.2 billion during the year has boded well for the sectors profitability. Margins for manufacturers have improved on account of a relatively stable Pakistani Rupee against the Japanese Yen; however, in the absence of the sales boost as a result of Government subsidy schemes experienced this year, growth is expected to decline to 6 percent during FY13. Moreover, the sectors profitability and productivity will also remain heavily sensitive to any structural changes in the tax regime as well as margin eroding currency depreciations. In this regard, the entire industrys focus remain riveted upon the announcement of the long-term Auto Industry Development Programme (dubbed AIDP-II) which will prove to be a critical factor in the industrys growth going forward into FY13.