Used cars overshadowing auto sales

Car sales have taken a further plunge in 2MFY13 witnessing a substantial decline of 30 percent year on year, according to figures released by Pakistan Automotive Manufacturers Association on Tuesday. Standing at 20,687 units against 29,537 units that were sold in Aug11, sales have been going consistently downhill amid the increasing influx of imported CBUS and comparatively higher prices of local manufactured cars. The massive increase in the prices of locally manufactured variants due to adoption of euro-II emission standards has increasingly made local favorites such as PSMCs Mehran unattractive to the price-sensitive buyer who is looking towards imported options that cost roughly the same but look and drive better. On that front, a typical Pakistan buyer- whose choices are predominantly influenced by factors such as fuel efficiency and value for money- is increasingly steering away from buying brand new cars. Consequently, foreign cars imported under the gift and personal baggage scheme by auto dealers has risen to a staggering 54,000 units in FY12, a figure which has grown leaps and bounds in the absence of Coure and Alto from the local market. Witnessing a 37 percent year-on-year decline, sales for Pak Suzuki remained subdued in August with its major sellers Cultus, Mehran and Bolan taking a 14, 12 and 41 percent plunge year-on-year. Similarly, INDU also took a backseat once again, with sales of the countrys favourite Sedan reigned in at 5,264 units, down 28 percent from the 7,362 units sold in Aug11. While a number of variants such as Suzukis Swift and Induss Hilux have managed to retain positive growth in terms of sales, the message is loud and clear: with compact looking foreign cars in every colour under the sun abound on the streets of Pakistans major cities, the local manufacturing giants such as PSMC and Indus Motors have taken a hard thrashing at the hand of an unlikely rival. A survey carried out by Pakwheels- one of the most trusted classified websites in the country- with the help of YouGov, a British based research organisation has recently found that among the respondents, only 32 percent had bought a brand new car in the last year while 65 percent had claimed to purchase second hand vehicles. Abetted by the fact that a large number of local banking institutions are now financing both used and new vehicles, the number of new vehicles on the road is set to decrease considerably in the coming months which spells further bad news for local manufacturers.