Karachi, September 11, 2023 – Pakistan’s automotive sector has experienced a significant setback, with car sales plummeting by a staggering 47 percent during the first two months of July and August 2023, according to analysts at Topline Securities.
This downturn in car sales reflects several challenging factors that have impacted the industry.
Analysts reported that car sales in Pakistan, as reported by the Pakistan Automotive Manufacturers Association (PAMA), reached 7,600 units in August 2023, representing a 49 percent month-on-month (MoM) increase but a 36 percent year-on-year (YoY) decline. When including non-PAMA members, car sales reached 9,000 units, marking a 46 percent MoM increase.
The significant month-on-month jump in car sales is attributed to the easing of issues related to Completely Knocked Down (CKD) kit imports. However, despite this short-term improvement, several challenges have hampered the automotive sector’s performance.
Escalating car prices, expensive auto financing options, and the low purchasing power of consumers have emerged as primary reasons for the substantial YoY decline in car sales. These factors have made it increasingly difficult for Pakistani consumers to afford new vehicles, leading to reduced demand within the market.
Notably, Pak Suzuki (PSMC) experienced the highest increase in car sales, with a 75 percent MoM growth in August 2023, reaching 4,268 units. This surge was primarily driven by increased sales of models such as the Alto, Swift, and Cultus, which saw substantial month-on-month increases.
Hyundai also witnessed a 37 percent MoM increase in sales, with the Tuscon model seeing a 42 percent MoM rise to 465 units in August 2023. Similarly, Honda Atlas Car (HCAR) recorded a 36 percent MoM increase, reaching 674 units. Indus Motors (INDU) reported a 13 percent MoM growth in sales, led by a 43 percent MoM increase in the sales of Fortuner and Hilux models.
In the tractor segment, Al Ghazi Tractors (AGTL) and Millat Tractors (MTL) reported increases of 52 percent MoM and 46 percent MoM, respectively, in August 2023. This brought the total tractor industry sales to 6,645 units in the first two months of fiscal year 2023-24, reflecting a 27 percent YoY increase.
On the other hand, truck and bus sales declined by 14 percent MoM and 51 percent YoY to 167 units in August 2023, resulting in a total industry sales decline of 41 percent YoY to 362 units in the first two months of the fiscal year.
Meanwhile, Pakistan’s bike sales showed a 20 percent MoM increase but were down 14 percent YoY in August 2023. Atlas Honda (ATLH) reported sales of 75,000 units, marking a 21 percent MoM increase but a 12 percent YoY decline, primarily due to higher bike prices and the low purchasing power of consumers.
The automotive industry’s performance in Pakistan remains closely tied to economic conditions, consumer sentiment, and factors such as inflation and financing costs. Industry stakeholders will be closely monitoring these dynamics as they navigate the challenges and opportunities ahead.
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