KARACHI: The Pakistan Automotive Manufacturers Association (PAMA) released its monthly data for Dec’23, revealing a dismal performance of the automotive industry. According to PAMA, the total sales of passenger vehicles dropped to 5.8K units, showing a 10% decrease from the previous month and a massive 66% decline from the same month last year.

The first half of the fiscal year 2023-24 also witnessed a significant slump in auto sales, as the cumulative figure stood at 39.5K units, down by 53% from the 84.1K units sold in the same period last year.

Analysts at Arif Habib Limited attributed the poor sales to a combination of factors that have adversely affected the demand for new cars in the country.

These include the overall reduction in consumer purchasing power, the unprecedented surge in inflation, the depreciation of the Pakistani rupee, and the higher interest rates. Moreover, the year-end effect also played a role in keeping the sales at a low level, as buyers usually defer their purchases to the next year.

The data also showed a mixed performance of different segments of the passenger vehicle market.

The 1,300cc and above category, which includes popular models such as Toyota Corolla, Honda Civic, and Honda City, witnessed a 12% month-on-month decline in sales, while the 1,000cc segment, which comprises Suzuki Cultus and Suzuki Wagon R, experienced a 3% month-on-month decrease.

On the other hand, the below 1,000cc segment, which includes Suzuki Alto, Suzuki Bolan, and Suzuki Ravi, showcased a jump of 15% month-on-month, settling at 2,425 units.

Among the major players in the industry, Indus Motors (INDU) reported a 28% month-on-month decline in volumetric sales in Dec’23, clocking in at 684 units.

The company faced a 51% month-on-month plunge in Fortuner and Hilux sales, which are its high-margin products. Pak Suzuki (PSMC), on the other hand, displayed an uptick of 7% month-on-month in overall sales during the same period, mainly driven by the strong demand for Suzuki Alto, which sold 2,212 units.

In contrast, Honda Atlas Cars (HCAR)’s volumetric sales plummeted by 11% month-on-month in Dec’23, which is owed to a 14% month-on-month reduction in Civic/City sales, settling at 787 units.

The data also revealed a decline in bike and tractor sales in Dec’23. Bike sales volumes experienced a 7% month-on-month and 21% year-on-year decline in Dec’23. Atlas Honda (ATLH) recorded 72K units in sales, registering a decrease of 5% month-on-month and 15% year-on-year.

Tractor sales faced a 26% month-on-month suppression in Dec’23. AGTL reported a sharp decline of 28% month-on-month, while MTL sales arrived at 2,099 units, shrinking by 25% month-on-month.

The outlook for the auto sector remains bleak, as the macroeconomic challenges and the rising cost of production continue to hamper the growth prospects. The industry is also facing a shortage of imported parts and raw materials, which has disrupted the supply chain and caused delays in deliveries.

The government’s recent decision to impose a 2.5% advance tax on the import of auto parts has also added to the woes of the auto manufacturers, who have urged the authorities to withdraw the tax and provide relief to the industry.

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