Pakistan Faces 18% Decline in Car Sales for FY24

Pakistan Faces 18% Decline in Car Sales for FY24

Karachi, July 10, 2024 – Pakistan’s automotive sector has witnessed a notable decline in car sales, reporting an 18% drop for the fiscal year 2023-24, according to data released by the Pakistan Automotive Assemblers Association (PAMA) on Wednesday.

During the fiscal year ending in June 2024, total car sales amounted to 103.8 thousand units, marking a significant decrease compared to the 126.9 thousand units sold in the previous fiscal year.

Despite the overall annual decline, June 2024 saw a resurgence in car sales within the industry, with a notable month-on-month (MoM) increase of 21% and a remarkable year-on-year (YoY) surge of 120%. This uptick in sales can be attributed to several economic factors, including declining inflation rates and favorable changes in monetary policy.

Analysts from Arif Habib Limited pointed out that the increase in car sales during June was buoyed by positive economic indicators. These include a noticeable decrease in the Consumer Price Index (CPI), which fell to 12.6% in June 2024, contributing to enhanced purchasing power among consumers. Additionally, a substantial 150 basis points reduction in the policy rate, down to 20.5%, has stimulated demand for auto financing, further supporting the uptick in sales.

Breaking down the car sales by segment, the 1,300cc and above category recorded a robust MoM increase of 29%, totaling 4,522 units. Similarly, the 1,000cc segment saw an 86% MoM surge, reaching 898 units, while the below 1,000cc segment witnessed a more modest 4% MoM increase, amounting to 4,708 units.

Among the key players in the automotive industry, Indus Motors Company Ltd (INDU) reported a significant MoM increase of 44% in June 2024, selling 2,957 units. Pak Suzuki Motors Company Ltd (PSMC) maintained momentum with a 15% MoM increase, selling 6,885 units, driven largely by strong performances in models like Cultus and Swift.

In contrast, Honda Atlas Cars (HCAR) experienced an 8% MoM decrease in June 2024, mainly attributed to declines in Honda BRV/HRV and Civic/City sales. Sazgar Engineering (SAZEW), on the other hand, saw a 12% MoM rise in sales, largely due to increased demand for its Haval models.

The two-wheeler segment, however, faced challenges with a 25% MoM decline in sales during June 2024, reflecting broader market dynamics.

In the agricultural machinery sector, tractor sales showed promising growth with a 34% MoM increase in June 2024. Al-Ghazi Tractors Ltd (AGTL) reported a significant 94% MoM surge, underscoring strong demand in rural areas.

The overall performance of Pakistan’s automotive industry in FY24 reflects a complex interplay of economic factors and consumer behavior, suggesting ongoing adjustments in response to market conditions. Analysts anticipate continued monitoring of economic indicators and policy adjustments to navigate future challenges and opportunities in the sector.