AUTO SALES-2M/FY08-PICKING PACE

MARIAM NASIR
Manager Research
Oct 01 - 07, 2007

Pakistan Automotive Manufacturers Association released the data for the month of August earlier. Overall unit production and sale of the industry rose by 22% and 25% to 134,571 units and 136,518 units respectively. However excluding motorcycle, the production and sale number rose only by 3% and 4% respectively. Car and LCV's sale and production surged by 5% and 8% to 33,456 units and 33,952 units respectively when compared with the production and sales figure of corresponding period. Production and sale of tractors during the two month was down by 6% and 7% to 7,640 units and 7,388 units respectively. Production and sale of trucks declined by 15% and 12% to 608 units and 698 units respectively. Motorcycle production and sale rose by 33% and 37% to 92,596 units and 92,247 units respectively. Sales of all the assemblers rose during the period under review. Pak Suzuki managed to roll out 19,350 units, up by 7%. Indus Motors sales picked up by 12.2% to 9,457 units while that of Dewan Motors and Honda Atlas Cars rose by 13.4% and 2.4% to 1,757 units and 3,165 units respectively.

SEGMENT

JULY- AUG - FY07

JULY- AUG - FY08

CHANGE IN % (UNITS)

 

PROD

SALE

PROD

Sale

Prod

Sale

Motorcycles

69,673

68,960

92,596

94,247

33%

37%

Bus

190

195

271

233

43%

19%

Cars + LCV's

31,796

31,553

33,456

33,952

5%

8%

Tractors

8,115

7,974

7,640

7,388

-6%

-7%

Trucks

718

790

608

698

-15%

-12%

Total

110,492

109,472

134,571

136,518

22%

25%

Total (Excluding Motorcycles

40,819

40,512

41,975

42,271

3%

4%

PERFORMANCE DURING AUGUST

Cars & LCVs production and sales for the month of August 2007 witnessed an 11% and 22% y-o-y increase to 18,162 and 21,051 units respectively, as per the figures released by Pakistan Automotive Manufacturers Association. Buoyant demand, diminishing competition from high-end imported vehicles along with increased capacities of local car manufacturers have substantially contributed to the robust growth seen in the auto industry. Breaking the numbers, company wise Pak Suzuki sales surged up by 98% m-o-m and 23% y-o-y to 12,864 units. Honda's Civic and City sales finally revived depicting a 51% and 146% m-o-m and y-o-y increase to 630 and 1,506 units. Indus Motor production and sale rose by 11% and 17% on a m-o-m basis to 4,639 units and 4,988 units respectively. While the production and sale of Dewan Motor grew handsomely witnessing a jump 109% and 25% to 865 units and 1,003 units respectively.

MARKET SHARE IN THE CAR SEGMENT

Market share of the companies witnessed a surprise change. Pak Suuzki market share which stood around 57% in FY07 dropped to 53% at the end of first two months of the fiscal year. Indus Motor benefited from the maintenance shutdown at Pak Suzuki's plant earlier during July and increased its market share to 34% from 29% in FY07. Honda Atlas share dropped to 11% while that of Dewan motor was 2%.

Pak Suzuki

53%

Indus Motor

34%

Honda Atlas Cars

11%

Dewan Motors

2%

IMPORTS

Vehicle import has been witnessing a huge decline since the last year. Month over month the numbers are declining. In FY06, there was a huge influx of imported vehicles as they were much cheaper and of better quality versus locally assembled cars. Such high numbers of imports put the local car assemblers in doldrums and panicked them over their billions of investment. Consequently, govt. imposed a restriction of 5-year age limit on car imports in Budget FY07. As a result of the imposition, the import numbers declined by 49% to mere 27,834 units as against 54,328 units in FY06.

FUTURE OUTLOOK

Selling prices have increased by 2.5% following the imposition of Withholding tax (WHT) from 1st September, 2007. Auto makers are all set to face the acid test in terms of buyers' acceptance of higher prices after adjusting for 1% SED on imports and 2.5% WHT on selling price. However, imports of second-hand automobiles were reduced from over 54k-units in FY06 to nearly 28k-units in FY07 following the age restriction to 5 years. Government in FY08 budget has further reduced the age limit to 3 years that, in our view, is a major blow to importers and equally bigger opportunity for assemblers. Since newer models of vehicles are costlier than their local substitutes, buyers are likely to revert to the later going forward.