Shifting gears

The automotive market is salvaging its size. After dropping to a historic low in FY24, the market is growing once again with sales up 55 percent in FY25 thus far. This is impressive enough, considering the economy is still only slowly trudging on a recovery path. Since June of 2024, the policy rate has been slashed down to 12 percent from an all-time high of 22 percent in quick succession and business confidence is bouncing back. Car buyers are checking their appetite, showrooms are fuller than before, and banks will soon get bombarded with fresh loan applications. This spells recovery but a complete rebound would entail more.

In 7MFY25, car sales including passenger cars, SUVs, and LCVs have grown 55 percent, with a major push originating from LCVs and SUVs, up 67 percent. As a proportion of total sales too, LCVs and SUVs were propelled by a slight recovery in Fortuner and Hilux sales and a massive demand incoming for Sazgar’s Haval—for context, Sazgar sold roughly the same number of Haval in FY24 as Fortuner and Hilux combined but in 7MFY25, Haval sales have ballooned surpassing Fortuner and Hilux by 1.5x. The rickshaw maker has introduced a hybrid vehicle that everyone wants a piece of—the demand has been overwhelming and it shows in volumetric sales.

Hyundai has been setting its roots in the Pakistani automobile market for some years rivaling Kia. It has been capturing said market rather slowly with a few offerings ranging from Hyundai Porter, an LCV to SUV Tucson which are both gaining popularity recently to its sedans Elantra and Sonata which have lost some seen since they were launched. Hyundai began with a 1 percent share in the market in FY21, which grew to 4 percent in FY22, to 6 percent and 8 percent in succeeding years. In 7MFY25, the company is boasting a 7 percent share in total volumes which is down from last year. The company evidently lost volumes on Tucson with Haval outshining other vehicles in similar SUV segments due to its powerful engine and luxurious features.

In 7MFY25, Haval has grown 2.7x since the same period last year making it a formidable contender in the market right now. Along with other vehicles in the segment, the SUV and LCV share in the total market has climbed to 25 percent this year, compared to 23 percent in FY2, and an average of 14 percent in the 13 years prior to that (since FY11). In volumetric terms, the numbers are not astronomical: in 7mFY25 for instance, the total SUVs and LCVs sold in the Pakistani market were roughly 19,000. To date, Sazgar has sold a little under 8,500 units of Haval. Even if one were to include Kia and other sales, the add-up would be incremental. Evidently, this segment serves a small share of the population but the reception of new players and models suggests the segment is excited and prepared for the change. The subsequent launch of Toyota’s Corolla Cross, Kia’s Sportage L, and Hyundai’s hybrid offering Santa Fe, also means that until full electrification happens, hybrid is the new horizon that every automotive assembler wants to surpass. Whether Haval HEV outperforms the new competition remains to be seen, but the market share is likely to keep growing.

On the other end is Alto, standing tall at more than 24,000 units in 7MFY25, up 50 percent from last year. Despite a higher price tag, Alto as the quintessential fuel saver for urban roads is the talk of the town. With financing options opening up, Alto and Bolan’s successor Every may find a bigger market than ever. The monthly installment for an Alto in Feb-25 (right now) would stand between 45,000 to 58,000, depending on the model selected (given a 30% down payment, 5% residua,l, and 5-year tenor). If the SBP unclenches its fists on the tightening consumer financing regulations and relaxes the limits placed on car loans, these cars could become slightly more affordable for middle-class car buyers. Despite its small stature, Alto is a beast, clinching 42 percent of the entire passenger car market and 32 percent of the passenger car + SUV/LCVs market with virtually no competition in the market.