The recently released automobile sales numbers by PAMA show an encouraging increase in overall car sales during the first half of FY10 as against the same period a year ago. There are, however, some interesting angles within the larger canvas, as different automobile categories met different fates owing to varying reasons.
Although, the overall sales figure depicts an increase in automobile sales but that has more to do with the low base effect of the same period prior year where the economic slowdown led to a sharp decline in vehicles sales - making the periodical comparison less meaningful. The car sales during the period in review jumped by a good 28 percent year-on-year basis, despite a significant drop in Cuore, Bolan and Liana.
Indus Motors sales registered a healthy 57 percent increase during the period against same period last year - which was partly fuelled by lower base effect carried from last year and partly because of phasing out of the previous Corolla model and significant purchases of Corolla by the security forces for patrolling purposes in the urban areas of the country.
PSMCs sales, on the other hand, were driven by significant surge in lower end segment cars - Alto and Mehran. But the overall sales volume of the company remained largely flat owing to a significant drop in Ravi and Bolan sales. Likewise, car sales of Honda slightly increased by 7 percent as it caters to the higher end segment which is less vulnerable to the overall economic situation.
Interestingly, the pick-up vehicle category showed the same magnitude that of car sales, with only difference being that it moved south, slumping 28 percent. The figures mirror the lackluster industrial and commercial activity in Pakistan to a great extent. Furthermore, the ever worsening political uncertainty did not help the cause either and kept the commercial activity largely at bay.
But it appears that the outlook for the remaining half of the fiscal year does not seem as bright as widely perceived in the market. A wiser comparison with that of the previous month also asserts the bleak outlook for the auto sales in the months to come as increase in car prices will significantly dent the purchasing power of buyers - who by and large belong to the low end segment and obviously are more sensitive to price changes.
In all likelihood, nobody should be expecting improved numbers for January sales either as car prices have been increased in the beginning of the New Year - which was a second revision in as many as two months. The rupee is showing no signs of halting its downward journey and is likely to depreciate further as the government will now be making the entire oil payments through commercial banks. This in turn would raise the prices of imported spare parts, equipments and petrochemicals, besides the all important rupee depreciation against yen.
There, however, is good news for motorbike makers as the above mentioned factors coupled with the high fuel prices will push more and more commuters to be on two-wheelers - a trend which has already started and is evident in the 41 percent jump in motorcycles sales during the first six months of FY10.
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Auto sector at a glance
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Sales (units) 1HY10 1HY09 % Chg
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Company statistics
Pak Suzuki 33,673 32,738 3%
Indus motors 20,902 13,331 57%
Honda Car 5,671 5,285 7%
Industry statistics
Cars 53,565 41,972 28%
Trucks & Buses 1,787 1,685 6%
Pick-Ups 7,478 10,501 -29%
Tractors 33,609 26,300 28%
Motorcycle 328,907 233,297 41%
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Source: PAMA
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