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LOW Source:
Pakistan Deaths
Pakistan Cases
1.45% positivity


The auto sector wrapped up half year sales with 122,347 units for passenger cars, commercial vehicles and tractors, a 3.5 percent decline from 126,740 units sold in 1HFY16, according to data reported by PAMA. Mostly, a solid jump in sales of trucks and tractors47 percent and 69 percent respectivelyhelped softened the blow from a decline in passenger cars and jeeps.

The fall in cars has been coming on since the close of the Apni Rozgar Taxi Scheme that resulted in faster sales for Bolan and Ravi last year. The decline (of 26 percent year on year) in sales compared to this period last year for Pak Suzuki Motor Company (PSMC) was expected. Bolan and Ravi sales both registered a decline of over 50 percent in 1HFY17 against 1HFY16, while Mehran sales fell by 5 percent.

WagonR is showing perseverance owing to favorable reviews from customers and an increase appetite of family-style hatchbacks. The variant recorded an increase in sales of 86 percent in 1HFY17 year-on-year. Even so, November was the best month for PSMC since the fiscal year kicked offin December, sales for Mehran, Bolan, Ravi, Swift all declined slightly.

Honda Atlas Cars (HCAR) outperformed among the other carmakers with a 56 percent increase in Civic and City sales; largely brought on by the demand generated by 10th generation Civic model. Meanwhile, Honda has launched a new makeover for its 9th generation Accord just two weeks ago that could potentially find a market, though its price tag of Rs11 lakh does not offer any clear advantage for the consumer.

Indus Motor Company (INDU) has remained more than tepidsales for INDUs flagship variant Corolla fell by 7 percent; and coupled with a fall in Fortuner sales; INDU recorded a 6 percent decline in the first half of FY17 against this period last year. Meanwhile, the new Hilux Model launched in October is proving to be popularjust between November and December, sales grew by 66 percent.

Tractors have seen a rebound with both Millat Tractors (MTL) and Al-Ghazi (AGTL) recording tremendous increase in sales together accounting for the 69 percent jump in sales in 1HFY17 against this period last year. December saw a decline in sales for the tractor companies but still outperforming from last year due to favorable reduction in sales tax and higher exports.

This year, and subsequent years, will see a massive turnaround in the trucking sector and this column has talked at length about the increasing demand. Already, average truck sales have gone up from previous years. Hinopak, Ghandhara Nissan, Ghandhara Industries and Master Motors are the key players together recording a 47 percent increase in sales in 1HFY17 against 1HFY16. Other companies in the trucking sector that go unreported by PAMA include Chinese FAW, which is fast becoming a major player.

FAW has also joined hands with Hyandai to bring Koreans trucks in, while Dewan Motors promised to bring Shahzore Trucks. At the same time, some Chinese groups are also showing interest. There is space for more players to enter, and this year might see more international collaborations with a favorable auto policy for foreign investment.

In the car segment, French automaker Renault already announced a $100 million investment while Audi is in the negotiation phase. After several back and forth with the government, PSMC announced it would invest $450 million in a new plant that would manufacture Celero and Alto in 1000cc and 660cc engines. If these materialise, there is no doubt PSMC will be the one to watch out with such a wide variety of cars, especially small engine cars that are all the rage.

Other private sector groups such as Lucky and Nishat also announced they would be bringing Kia and Hyandai cars, respectively, into the market utilizing the auto policy and their market goodwill.

The outlook for the sector remains predominantly positive despite a recent decline in sales for passenger cars. The demand can be ascertained by the rise in used cars imports, and better local variety cars would definitely divert customer attention inward. More players and competition could potentially bring prices down in the long run, which is crucial at this point. Trucking sector will see the most growth, in terms of sales, competition and expansions. Lets wait and watch how many jobs and opportunities these new developments in the sector will garner.

Copyright Business Recorder, 2017


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