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Coronavirus
LOW Source: covid.gov.pk
Pakistan Deaths
28,344
1624hr
Pakistan Cases
1,267,393
56724hr
1.45% positivity
Sindh
466,945
Punjab
438,636
Balochistan
33,159
Islamabad
106,615
KPK
177,240

Honda Civic is the top locally assembled car for consumers in Pakistan. So says a survey run by PakWheels which showed that consumers chose Honda Civic to be the best car in 6 out of 12 parameters (see table), though it seems the real winner here is Toyota since the brand seems head and shoulders above its peers. Based on brand perception, Toyota ranked on top by respondents in value for money, brand image and quality. Undoubtedly Corolla happens to be the most sold car in the country, and a 2015 Carmudi survey presented a similar finding. However, with over 35,000 respondents, this survey identifies three interesting trends that ought to open different streams of discourse.

First: the survey provides solid evidence to the perception that Pakistani folks prefer Toyota and Honda even amidst all the hype about other Japanese-make imported cars like Daihatsu Mira, Mitsubishi Mirage, Nissan Highway etc. Of the 12 categories (see table), consumers prefer Toyota vehicles in 9 of them in the imported segment, with the rest going to Honda. Most of the used imports come through car auctions held in Japan that have cars from all over the world. Is this indicative of how well non-Japanese Hyundai and Kia would do in the local market?

Second: the survey results reject the popular perception (or clearly misperception in this case) that resale value is a big, if not the biggest, determinant for a prospective car buyer. In fact, consumers chose vehicle safety on top, followed by comfort, fuel efficiency, value for money and engine performance in that sequence. The resale value was the second last factor that comes into play in car purchasing decisions.

This is the same for motorbikes. Loss of value or depreciation is usually considered a primary expense. A lower resale value may also prove to be a hindrance in the consumer’s ability to buy a new car down the road and adds to the cost of ownership. Are consumers looking to drive their cars without upgrading or selling them off?

It seems more likely that they are weighing their options by going for cars that will provide them with maximum utility in the present, and with good maintenance may also have good resale. Since there are limited brands in the market, and parts for those brands are aplenty, ultimately the final purchasing decision is justified.

An interesting observation here is this: both Toyota Corolla and Vitz are chosen as the best cars in terms of resale. Is it a coincidence that both happen to be the most sold cars—Corolla in the local category and Vitz in the imported category. In 2017, Pakistanis imported over 8000 Vitz which was the largest volume in all the imported vehicles while over 52,000 locally assembled Corollas were sold that year.

Third: the survey shows that 64 percent of the respondents bought a used car, versus 34 percent that brought a new car. Meanwhile, 70 percent of the respondents owned a locally manufactured car, while 28 percent owned an imported car. It clearly shows that a vast majority of consumers are going for old cars but most of them are locally assembled, rather than imported. Local carmakers often complain about used car imports but clearly, they need not worry. Since the price differential is not that huge—local assemblers are clearly charging premium rates for their cars without hesitance—it again begs the question how Pakistani consumers would receive new automakers in the mix. The expansion of the market in its truest sense hangs in the balance.

Copyright Business Recorder, 2019

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