Karachi, January 11, 2024 – Pakistan has recorded a staggering 66% decline in car sales on a Year-on-Year (YoY) basis for December 2023.
According to industry reports, only 5,816 units were sold during the month, in stark contrast to the 17,012 units sold in the same period the previous year.
The slump in car sales has been a persistent trend throughout the first half (July to December) of fiscal year 2023-24, with numbers dropping from 84,116 units to 39,454 units, marking a 53% decrease in comparison to the corresponding half of the last fiscal year.
Financial analysts at Arif Habib Limited attribute this sharp decline in auto sales to a combination of factors. Firstly, an overall reduction in consumer purchasing power has played a crucial role. Secondly, an unprecedented surge in inflation has further deterred potential buyers. Thirdly, the depreciation of the Pakistani Rupee (PKR) has led to an increase in the cost of imported parts and components, contributing to the overall decline in sales. Lastly, higher interest rates have made financing more expensive, collectively resulting in weakened demand for new passenger vehicles. The year-end effect also played a role in maintaining sales at lower levels.
Segment-wise analysis reveals a nuanced picture of the automotive market. The 1,300 cc and above category experienced a 12% Month-on-Month (MoM) decline, while the 1,000 cc segment saw a 3% MoM decrease. However, the below 1,000 cc segment defied the trend with a 15% MoM increase, reaching 2,425 units.
In terms of individual manufacturers, Indus Motors (INDU) reported a substantial 28% MoM decline in volumetric sales for December 2023, totaling 684 units. This decline was primarily attributed to a 51% MoM plunge in Fortuner and Hilux sales. In contrast, Pak Suzuki (PSMC) displayed a positive trajectory with a 7% MoM increase in overall sales during the same period.
Honda Atlas Cars (HCAR), on the other hand, faced a setback with an 11% MoM decline in volumetric sales for December 2023. This decline was attributed to a 14% MoM reduction in Civic/City sales, settling at 787 units.
Beyond cars, the motorcycle industry also experienced a downturn, with bike sales volumes witnessing a 7% MoM and 21% YoY decline in December 2023. Atlas Honda (ATLH) recorded 72,000 units in sales, marking a decrease of 5% MoM and 15% YoY.
The agricultural sector also felt the impact, as tractor sales faced a significant 26% MoM suppression in December 2023. AGTL reported a sharp decline of 28% MoM, while MTL sales arrived at 2,099 units, shrinking by 25% MoM.
The comprehensive decline in various automotive segments signals broader economic challenges and indicates a need for strategic measures to revive consumer confidence and stimulate demand in the Pakistani auto market. Industry stakeholders and policymakers are closely monitoring the situation to devise effective solutions to support the automotive sector’s recovery in the coming months.
