LAHORE – SALMAN ABDUHU - Unchecked price-hike as well as uncontrolled used cars import have played havoc with local sale of vehicles in July, as it plunged by 46 per cent on monthly basis and 41 per cent on annual basis to 10,435 units in July 2012.

According to latest sales figures released by Pakistan Automotive Manufacturers Association (PAMA), the broad-based decline in sales was largely anticipated.

Experts said that completion of the subsidised Yellow Cab scheme of the Punjab government for FY12, continuous price hikes by the local manufacturers and mounting pressure from imports amid reduction in price differential versus locally manufactured vehicles were largely responsible for the decline in sales. Imports meanwhile rose by 25 per cent on monthly basis to 4,950 units in July 2012 and catered to 32 per cent of the overall demand in the country. By comparison, share of imports in FY11 and FY12 stood at 11 per cent and 23 per cent, respectively. Experts anticipate auto sales to remain relatively subdued in August as well owing to lower working days amid religious festivities of Ramazan and Eid.  Pre-price hike buying by customers in June-2012 led to a 45 per cent MoM fall in the sales of Indus Motors in July 2012, as the company raised car prices by an average of Rs 60,000 on June 26, 2012.

With the completion of the Punjab government’s Yellow Cab scheme for FY12, Pak Suzuki unit sales declined by 51 per cent MoM. PSMC registered zero sales for Alto, which has been phased out by the company.  An expert Syed Atif Zafar observed that the announcement of the new long term auto policy may hold significant risk for the local manufacturers as the government is likely to lower duties on imported vehicles.

Some experts are of the view that July FY12 commenced with a 41 per cent YoY drop in industry sales as the total units for the month stood at 10,352 units. This abnormal decline is clearly attributable to the high base effect witnessed in the month as expectations of a tax cut in budget FY12 resulted in deferred sales in Jul 2011.

PSMC’s sales took a 53 per cent YoY massive plunge owing to decrease in units due to discontinuation of Alto. Subsequently, Mehran and Cultus, both PSMC’s major revenue contributors, also witnessed a decline of 39 per cent and 33 per cent YoY respectively.

Corolla, the revenue driver for IMC saw its sales units go down to 3,087 units in July 2012 from 4,551 units in the same period last year whereas Hilux contrastingly had its sales up by 37 per cent YoY. Cumulatively, sales for the company went down by 32 per cent YoY to 3,087 units from 4,551 in the same period last year.