Fiscal year 2022-23: car sales drop 56% due to high prices, low purchasing power

The automobile industry of Pakistan took a massive dent in fiscal year 2022-23 as car sales plunged 56% to just 126,879 units, according to data shared by Pakistan Automotive Manufacturers Association (PAMA) on Tuesday.

The huge decline is mainly due to non-availability of completely knocked down kits (CKDs), high car prices, surge in auto financing and low purchasing power of buyers.

Monthly sales in June 2023 dropped 79% year-on-year to just 6,034 units. However, the sales were 10% higher compared to sales in May.

Pakistan’s Indus Motor Company starts exports to Toyota Egypt: CEO

Speaking to Business Recorder, Foundation Securities Head of Research Muhammad Awais Ashraf said that “auto sales dropped due to restrictions imposed by the government on opening of LCs for completely knocked down (CKD) kits besides persistent increase in car prices and continuous hikes in interest rates”.

Topline Securities research analyst Sunny Kumar stated in a report that “Honda Atlas Car (HCAR) posted the highest increase of 253% month-on-month to 307 units in June due to the low base of last month and availability of parts”.

Pak Suzuki recorded a meagre growth of 2% month-on-month to 3,009 units in June owing to 67% surge in sales of Bolan. However, bookings of the company plunged 57% to 65,364 units in fiscal year 2022-23.

Indus Motor Company, the assemblers of Toyota cars, recorded an increase of 7% in bookings on a month-on-month basis to 1,846 units in June. This takes the total number of cars sold by the company in fiscal year 2022-23 to 31,104 units, down 58% year-on-year.

Pak Suzuki extends automobile, motorcycle plant shutdown till July 19

Hyundai Nishat Motor’s sales also increased 11% month-on-month where Tucson sales increased 61% to 313 units and Elantra increased 28% to 88 units in June.

In tractor segment, Millat Tractors (MTL) bookings recorded an increase of 42% month-on-month to 2,136 units in June while Al Ghazi Tractors (AGTL) recorded sales of 854 units, down 57%.

This takes total tractor industry sales to 30,942 units in fiscal year 2022-23, down 48% due to floods, plants shutdown, lower consumer buying power and higher prices.

“High interest rates and significant increase in auto prices due to rupee depreciation against dollar would continue to negatively impact auto sales in fiscal year 2024,” Ashraf added. “In the short term, restrictions on opening of LCs for import of CKD by auto assemblers would result in lower utilisation of plant capacity across the board and, in the extreme case, it would lead to plant shutdowns.”