KARACHI: Car sales have slumped by 44 percent to 67,019 units in first half (July – December) of fiscal year 2019/2020 as compared with 120,066 units in the corresponding half of the last fiscal year.
Major drop witnessed in the sales of Honda Cars which fell 66 percent to 8,146 units during first six months of current fiscal year as compared with 24,278 units in the same period of the last fiscal year.
It was followed by sales of Indus Motors which fell by 57 percent to 14,175 units in first half of current fiscal year as compared with 32,631 units in the corresponding period of the last fiscal year.
The sales of Pak Suzuki Motors witnessed decline of 27 percent to 44,698 units during the period under review as compared with 63,157 units in the corresponding period of the last fiscal year.
Analysts at Topline Securities said that overall Pakistan car sales jumped by 23 percent MoM to 12,069 units in December 2019, however the rise was largely led by 49 percent MoM increase in sales of Pak Suzuki Motor Company (PSMC).
The other two major manufacturers, Indus Motor (INDU) and Honda Car (HCAR) sales dropped by 12 percent MoM and 23 percent MoM, respectively.
The increase in sales of PSMC was largely driven by the announcement of increase in car prices by the manufacturer in mid of December 2019, which was effective from January 1, 2020.
The decline reported by the other manufacturers was largely in line with the historical year-end phenomenon, where consumers generally delay their purchases until the new year.
On a YoY basis, weak demand dynamics was again evident from a 38 percent YoY fall in sales in December 2019, taking 1HFY20 decline to 44 percent YoY.
This is primarily attributable to 1) higher car prices mainly due to PKR devaluation and 2) higher interest rates.
PSMC sales were down 26 percent YoY in December 2019, while INDU’s sales declined by 56 percent YoY with Corolla sales falling by 50 percent YoY.
HCAR sales fell by 58 percent YoY during Dec-2019 with combined sales of City & Civic declining by 56 percent YoY.
Sale of motorcycles by Atlas Honda (ATLH) witnessed an increase of 6 percent YoY as sales clocked in at 85k units, however it recorded a decline of 11 percent MoM.
Tractor sales recorded a growth of 75 percent YoY with Millat Tractor (MTL) sales rising by 175 percent YoY. On the MoM basis, overall tractor sales were down 37 percent MoM.
Analysts expect recovery in car sales volumes from start of 2020 as we believe volumes would have bottomed out in December 2019.