Pakistan’s car sales fall 11% on rising financing cost

Pakistan’s car sales fall 11% on rising financing cost

KARACHI: Pakistan’s car sales have declined 11 per cent Month on Month (MoM) to 18,714 units in November 2021, according to data released by Pakistan Automotive Manufacturers Association (PAMA).

The fall in car sales has been attributed to rising financing cost after monetary policy tightening by the State Bank of Pakistan (SBP). The SBP on November 19, 2021 increased the policy rate by 150 basis points to 8.75 per cent.

However, the total number of car sales including Non-PAMA members was at about 23,900 units, down five per cent, according to analysts at Topline Securities.

The analysts said that this is the second consecutive month where sales have witnessed a MoM decline.

They are now down by 25 per cent from their peak sales in July 2021.

They attribute this to rising financing rates, stringent financing requirements by SBP and year end phenomenon where car sales generally slow down.

On Year on Year (YoY) basis, car sales grew by 29 per cent YoY in November 2021 on the back of low base effect. In July – November of the current fiscal year, car sales are up 65 per cent YoY to 108,625 units.

Honda Car (HCAR) reported a 13 per cent MoM increase, mainly due to low base where the company sold only 7 units of BRV last month. Hyundai Nishat and Pak Suzuki Motors (PSMC) reported sales decline of 30 per cent and 17 per cent, respectively.

Along with the above mentioned factors, increasing competition from new players including KIA Motors, MG Motors and Changan are impacting the market share of listed auto assemblers.

Pakistan bike sales were down 7 per cent MoM to 166,630 units in Nov 2021. Atlas Honda (ATLH) sales were up 3 per cent MoM and 19 per cent YoY.

Pakistan tractor sales were down 14 per cent MoM while Trucks/Buses sales were up 10 per cent MoM.

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