Putting a dampener on the prospects a little, a few days ago French carmaker Renault suspended its plans to come to Pakistan after all. The Renault-Nissan Alliance had signed on with Ghandhara Nissan and Al-Futtaim of UAE to assemble the brand's vehicles in Karachi with an initial investment of $100 million. More on that later, but meanwhile, auto demand is breaking some ceilings.
According to Pakistan Automotive Manufacturers Association (PAMA), total sales grew by 38 percent for all automobiles including commercial vehicles and tractors in 4MFY18 year on year. Cars and jeeps constitute nearly 68 percent of share of these sales, growing by 33 percent during the period.
Completely Built Unit (CBU) imports on the other hand, show car imports nearly doubling in the July-Sep 2017 period against this time last year (per PBS). Automakers, and authorized dealers are clearly importing more. Though October and November may write a different tale as regulatory measures taken by the government to curb car imports-both used and new-might take flight.
It is interesting to mention here that auto financing according to the Central Bank's data has grown by 37 percent between September of 2016 and 2017-in tandem with the growth in the sales of local automobiles.
Locally assembled cars most likely to be seen on urban roads are Suzuki's WagonR and Cultus, and the numbers corroborate this. Pakistan Suzuki Motor Company (PSX: PSMC) captured 55 percent of the cars and pickups market with WagonR sales whilst competing with several imports varieties growing by 92 percent! Cultus despite a higher price tag has received quite the reception, growing by nearly 50 percent in 4MFY18. On other models, Suzuki has been importing CBUs of sedans and SUVs, Ciaz and Vitara respectively as well, with heavy marketing to follow their launches.
On the higher engine end, Indus Motor Company (PSX: INDU) flagship variant Corolla-which is awaiting an upgrade-grew by 2 percent as the company was going through some production constraints. However, INDU earned a decent profit in the outgoing quarter with higher prices and as Hilux and Fortuner sales grew substantially. Fortuner now constitutes nearly 6 percent of volumetric sales and that's a high margin SUV for the House of Toyota right there. The company is undergoing capacity expansion.
Honda Atlas Cars (PSX: HCAR) has turned around its fortunes. It is now locally assembling a crossover SUV, Honda BR-V and has received tremendous response, selling nearly double of Fortuner though the latter costs twice as much per unit. In 4MFY18, Honda captured 20 percent of the market share among the three players.
Looking back, it was over a year ago when the auto policy was announced and many European names were whispered in a hush-hush who the Board of Investment (BoI) was vying to bring on-board. Since then, news of such names has all but died down. Audi went out the picture a few months ago while Renault after inking a deal with a local partner bid Pakistan farewell as well. Meanwhile, Lucky with Kia and Nishat with Hyundai are going through with their plans; so there is still some skin in the game. Let's talk about what these post-Renault new dynamics will entail in this column next time.
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