CAR SALES JUMP 31.71PC

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

Mar
22 - 28, 2010

Sales of passenger cars climbed up 31.71 percent to 75,275 units in July-Feb 2010 over 54,660 in July-Feb 2009. This has proved that Pakistan is a flourishing market for automobile and automobile industry is one of the industries that are withstanding the economic challenges. Localization in automobile industry is negligible at present and imported components outweigh local parts in the car making process. There is an immense potential for local automobile manufacturing in Pakistan.

A phenomenal increase in sales during the eight months of current fiscal year was witnessed in 1300 and above cc passenger car segments as sales grew 36,136 units as opposed to 22,263 units in the comparable period, showing an increase of 62.31 percent. However, this segment underwent a cut in sales in February as overall sales decreased to 5,425 from 6,376 last month. Sales of total passenger cars that include 800cc to above 1300cc of Honda, Toyota, and Suzuki declined during the month of February to 10,310 units as compared to 11,400 units in the previous month, as per the statistics released by the Pakistan Automotive Manufacturers Association.

Total sales of 1000 cc increased 23.5 percent while sales of 800 cc and below 1000 cc grew 19.2 percent during the period under review. The increase in sales of 1300 above cc cars was in accordance with the expectation of carmakers forming the triangle of automobile players in Pakistan.

Local carmakers in the country pin hopes to resilience of this segment in propelling their profitability graphs. Eight months results have emerged according to their expectations and indicated the trend to be continued rest of the months of this financial year. An auto expert of a leading carmaker gave an indication of his company's resolve to draw on rebounding sales of 1300cc for correcting its bottom-line during a talk with the Page. Up in support price of crops triggered the buying capacity of farming community, he said. Amongst three, Toyota remained a high-flying seller of this segment after having managed to throw 25,817 units of its flagship corolla brand in July-Feb 2010 in the market, up 76.18 percent over 14,654 in the corresponding period of 2009. Notably, sales of its 800cc Daihatsu Cuore dropped 26.7 percent during the period under review to 3,231 units from 4,413. In February, its sales stood at 573 units as against 682 a month ago.

In 1300 and above cc segment, sales of Honda Civic increased 10.7 percent to 3,545 in July-Feb 2010 from 3,202 in the similar period last year. Sales of Honda City and Suzuki Liana increased 35.1 percent to 5,114 units from 3,784 units and negligible 4.4 percent to 651 units from 623 units, respectively.

In 1000cc segment, Suzuki Alto clinched the leading position as total 6,751 its units were sold during the eight months. Total units sold in the comparable period were 4,715. A comparable increase was more than 43.1 percent. Sales of Hyundai Santro inched up to 241 units from 187 units. An increase was also registered in sales of Suzuki Cultus, which witnessed rise of 10 percent to 7,588 units from 6,895 units. Similarly, overall economic class segment (800cc and below 1000 cc) witnessed surge in sales of 19.2 percent during July-Feb 2010 over July-Feb 2009. Suzuki models remained in demand in the market in this segment as usual.

Barring a decline in sales of Toyota's Daihatsu, sales figures of Suzuki Mehran and Suzuki Bolan swelled remarkably. Sales of Suzuki Mehran increased 51 percent during the period under review to 14,360 units from 9,509 units previously. In February also, the sales increased to 1,707 units from 1,666 units in the preceding month. Sales of Suzuki Bolan increased 4.3 percent during the eight months to 6,968 units from 6,678 units.

Highest jump in sales in cars that have prices more than that of economical class is a matter of surprise for some observers. Increase in sales of economical class cars is also an equally phenomenon to be reckoned with. Prevalent economic conditions especially inflation that is not ready to go down to single digit are giving rise to concerns of public contracting their expenditures. Interestingly, despite rise in quantity of cars in almost all segments, prices were adamant. Some brands in 1300 and above cc segment though saw cut in prices, yet the reduction was not significant. For example, Toyota a leading shareholder in this segment took a pain to slash price of its flagship brand miniscule percentage of total ex-factory cost. Criticisms, then, are based on logic that the company is enjoying high sales without giving due price benefits to its customers who are too fleeced with baseless own price. Dealers charge extra money from customers for immediate delivery of vehicle to them. Since ready stocks are limited, they somehow manage to make restless customers pay more than the original price of car. This practice has been a norm since long. Usually, dealers wipe out cars from the market, which creates shortage and thus this makes them free to charge extra money from customers for instant delivery. It is quite worthy to recall that Toyota had enough units in store to sale in the period under review because of previous unsold stocks. The Japanese joint venture carmaker holds one of highest shares in the market for its 1300 cc Toyota Corolla. It has launched recently a campaign to control profits hunger of dealers by conditioning supply of car with identification of customers. Now, the company will verify before selling cars if customer has commercial motive behind buying. In addition to this, customers will not be allowed to sell car some period after purchase. This period could be three months. Critics also raise a valid question about the advantage of rise in sales to the economy, since local parts still constitute a negligible portion of a whole car production process. The growth of auto vendor industry and employment can be increased manifold after only considerable localization of automobile industry.