Jan 25 - 31, 20

In the past, robust auto sales were linked with auto financing. Lately bulk of the auto sales comprises of the models enjoying full cash payment, along with premium. However, sales of 1000cc and lower categories have not picked up in the corresponding manner. The intermittent hike in auto price in the name of rising steel prices and changing model, has been forcing the low-end customers to put back purchase of new cars. In order to understand the prospect, it is necessary to analyze auto assembly and banking sectors separately.

It is not only the price of car or the interest rate that influences sales. There are two other factors, shrinking purchasing power and rising cost of fuel (both petrol and CNG), which force the buyers to defer purchase of new car. Added to these are rising car snatching cases and bomb blasts and riots.

As anticipated, auto sales were down 15% MoM in December 2009 to 8,500 units mainly because some of the customers deferred car purchase at the yearend. However, on YoY basis sales were up 119%, as the yearend effect was less severe this time as compared to December 2008 when sales plunged by 55% MoM.

December has historically been the leanest month for auto sales, accounting for just 6.6% of annual sales. Car sales were down sharply by 17.6% MoM while the LCV + Pickup segment seemed less immune from the yearend effect registering only1.4% MoM decline.

Car sales registered robust recovery, rising by 28% YoY during July-December 2009 while the LCV + Pickup segment pulled down the overall growth with sales declining by 28% during this period. Further breakdown of car sales into segment indicates progressive increase in car sales across the board. Sale of cars with engine capacities of 800cc and below category was up 5% on YoY basis, while sale of 1000cc category was up 13%. Sale of 1300cc and higher category recorded the highest growth of 63% YoY. This was mainly due to higher sale of Corolla.

It is worth mentioning that the 1300cc and above category caters to the high-end customers whose purchasing power is least sensitive to the burgeoning inflation.

Decline in LCV + Pickup segment sales was due to sharp fall in PSMC's Ravi sales going down by 31% on YoY basis, which accounted for 77% of the segment sales.

Due to higher Corolla sales, overall sales of Indus were up 57% YoY to 20,900 units followed by Pak Suzuki up 3%. With the new Swift model launched, and priced at the lower end of the 1330cc category, it would be interesting to note its response. Swift is most likely to compete with two other products of the company. Swift is priced in between Liana and Cultus also enjoying their niche market.


Pakistan's banking sector has been successful in neutralizing the impact of SBP's directive to pay at least 5% return on savings deposits. This is evident from sustainability of high net interest margin (NIM) levels. Profitability of commercial banks was affected in 2008 and 2009 but it had more to do with high provisioning and impairment levels on advances and investment.

Despite all that has been going on in the economy falling inflation is reducing interest rates, though marginally. Demand for private sector credit is on the lower ebb. GDP growth rate is at historically low levels. Despite the SBP stipulating return on saving accounts average spread hovers around 7.5%. It seems that the regulator and the players are happy in maintaining spread range bound.

A closer examination of average spread shows that pressure on banks to fund their balance sheets through high-cost deposits has gradually subsided.

Though it is said that with the onset of recession delinquency is on the rise, some of the experts do not subscribe to the idea. They say that financial institutions have become less interested in auto financing and now prefer to invest in government securities. They also say that rising delinquencies are because of reckless financing in the past.

Auto sector experts say that rising delinquencies is not linked to higher interest rate but the result of imprudent financing. They also say that most of the cars reported 'snatched' in Karachi were actually sold in the upcountry markets with the connivance of police and motor registration offices. They also term the role of recovery staff highly dubious. According to well-informed sources, often the recovery staff repossesses the vehicles but does not report to the financial institutions.


The poor sales of automobiles can be attributed to a number of factors that include subdued economy, higher interest rate, frequent increase in the prices of vehicles and above all fuel cost becoming unaffordable for the masses. It is feared further reduction in discount rate may not be possible due to recent hike in electricity and gas tariffs. Although, assemblers have been able to maintain their margins but low sales volume is affecting the manufactures of parts and accessories. Dozens of units have already closed and thousands of workers lost their jobs. However, it is also a fact that as long as the country faces precarious law and order situation and political uncertainty remains high, revival of economy is a far cry.



Samsung Electronics Co. Ltd. a global leader in cutting-edge technology has signed with TeleTec Solutions Pakistan as its new official partner and has also unveiled its latest GenoA touch screen mobile phone for its customers.

Mr. Zeeshan Qureshi, Head of Mobile Phones Division, Samsung Pakistan & Afghanistan at this occasion expressing his views stated, "The Samsung GenoA is a testament to the technological edge, and this touch screen phone will extend the most fulfilling mobile experience to customers. By having TeleTec on board we have ensured an even higher standard of sophistication and swiftness in our Sales and Service network to facilitate our customers".

Danish Haroon, CEO Teletec stated, "We are delighted to partner with Samsung Electronics and are fully committed to make Samsung's products a resounding success in Pakistan. With Teletec's extensive dealer network in all major cities of Pakistan, consumer will receive top quality cellular devices and gadgets easily and conveniently."

The phone launch was attended by senior media scribes who witnessed a wide array of unmatched GenoA features including; GSM Quad-band, GPRS/ EDGE, and weighs only 92 grams. A standard Li-ion, 960mAh battery provides 3.8 hrs of Talk-Time and 400 hrs Standby time. Its memory comprises of 32MB +microSD (up to 8GB). Moreover a Bluetooth v2.1 FS, USB v2.0 (High speed) and a 3.5mm Ear-jack are also included. It has Google Search / mail, WAP 2.0 / Java MIDP 2.0, mobile Printing capabilities with a Display of 2.8" QVGA 262K (TSP) and a Full Touch Screen.