In the midst of a steep 55% drop in car sales, a surprising revelation has emerged – the revenues of key automakers have taken an unexpected upward turn. Recent research by Business Recorder has shed light on this intriguing scenario.
Falling Sales, Rising Profits
Despite a significant decline in sales in the country, leading assemblers such as Suzuki, Toyota, and Honda have reported a remarkable increase in revenue per unit sold. Suzuki’s revenue has surged by 76%, Toyota by 79%, and Honda by an impressive 96%. The driving force behind this financial boost is persistent price hikes camouflaged under currency devaluation.
Skyrocketing Car Prices
A closer look at the price trends reveals the core of this paradox. Average car prices assembled by these manufacturers shot up by 54% compared to the previous year. The strategy of focusing on pricier models has effectively elevated the revenue per unit sold, compensating for the dwindling sales.
High Price Tags in Local Markets
The local market paints an astonishing picture of vehicle prices. Suzuki’s 660cc Alto commands around Rs 3.0 million, while the 1000cc Wagon R and Cultus reach up to Rs 3.8 million and Rs 4.4 million, respectively. Toyota Yaris B-sedan soars to Rs 6.0 million, while the Corolla C-sedan reaches a staggering Rs 7.8 million. Honda’s City B-sedan stands at Rs 6.0 million, while the Civic C-segment sedan goes as high as Rs 10.2 million.
Economic Divide in the Spotlight
This unusual trend speaks volumes about the economy’s health and the deepening income inequality. Despite a decline in car financing accessibility for the middle class, the wealthy continue to splurge on high-priced automobiles. This situation underscores the growing economic disparity, revealing more about the overall economy than just the automotive industry.
The paradox in the automotive industry’s financials raises eyebrows and prompts reflection on the broader economic landscape. While car sales plummet, the revenues of major automakers remain surprisingly buoyant, indicating a telling story of income inequality and skewed economic priorities.
In the graph, we can clearly see that the the total units sold have also gone down by a huge margin. Yet the profits are way up. I.e. Sales are down, Yet profits are up. That only means the profit margins per unit sold are at such levels that even in a serious downturn (in sales), they are showing a massive profit. Doesn’t this bring into question their recent price hikes and their need and/or validity?
“Economic divide” is one thing, let us also look at the unchecked profits earned per unit sale by these old three local assemblers.
In a sane and fair country/market, this would be a cause for concern and scrutiny for a government and their business watchdogs (e.g. unfair means/unfair advantage etc.).
Unfortunately, In Pakistan… 🤷♂️
Dear author, aside selling cars, these assemblers have been making money from selling car parts, offering services, and making investments. Did you segregate the operating profit among the business segments? Business recorder has not done it, besides, they have taken estimated not actual data, therefore, possibility of change cannot be ruled out either. Please, avoid publishing such news articles as they are misinforming the readers. Anyways, look through the latest I.M.C. annual report submitted to S.E.C.P. and read pages 39, 114, 150, and others if you like. Then you shall notice that as compared to car assembling, trading segment has grown by larger margin, which has catapulted the net profits https://dps.psx.com.pk/download/document/191908.pdf
On another note, and in my view, aside income inequality and economic policies, personal preferences, and spending habits also affect personal wealth. For instance, we can see people smoking when they are crying that they do have any money to buy food, I mean why prioritise a habit over necessity? Similarly, if you notice, minor kids shall be seen zooming through streets on a bike, is this activity not costing? As far as I am aware not exercising this shall not kill them.
@Khurram
The report you shared is from 2022. This article is discussing 2023.
@Ali Khan
Khan Sb, instead of counter arguing and making yourself look like a fool understand the mechanisms of accounting. Annual report for the year 2023 has not been prepared and published yet, or at least that is what Pakistan Stock Exchange website is saying which is why the business recorder is using the term estimation, which by the way is synonymous with assumption.
Dear author,
I am noticing that you are continuously deleting my reply to Ali Khan’s second comment, whatever your intentions are, but one thing is clear, you are a biased person you are allowing his comment, which by the way is displaying lack of accounting knowledge, to remain. Know only that you are colluding in a slanderous remark against the three assemblers. Yes, read the caption tagged to your image, it is saying estimations which means that figures are just assumptions, in other words they are not at all reflecting actual picture achieved by the assemblers in 2023.
I have reported this article among the LinkedIn community, and by this comment I am requesting the higher management of Pak Wheels to take action against this piece because it is nothing but a load of misinformation. Thank you and regards.
@Khurram
Buddy! I didn’t know stating a fact is being foolish. I’m not pretending to be a jack of all trades like you but I do understand that projections and estimations are at the core of any business/accounting/finance/marketing etc. These projection charts are the way businesses (or anyone) estimate where they are headed. Be it anything they want to measure; ICE car sales, Hybrids sales, EV sales or Phone sales, smart watches or even aaloo, gajar, pyaaz, tamater waghara, waghara (etc. etc.).
Why do Statistic companies/institutes or any companies/entity share projections for things like Vehicle sales or phone sales or TV sales or home sales or any other product or services etc. They can be quarterly or yearly or 5 years or 10 years etc. Again, its a good way of getting a very good idea of where things (or the market) are and where they are headed. If that is all bull according to you, why do companies like Toyota itself give projections of sales or profits for the next few quarters or years. If you still think data in such estimation/projection charts is all fake, go talk with someone who invests in stocks.
However, coming from someone who:
1 – Believes stating a simple fact is being foolish
2 – Thinks information given in a simple projection or estimation chart is “a load of misinformation”
3 – Thinks the author of an article is sitting down and screening each and every comment themselves,
4 – Is threatening with action on linked-in…. OK…..
5 – Still firmly believes that wearing the seatbelt in his old car affected the fuel economy of that old car,
your rant is not surprising.
@Ali Khan
You have no idea what segmented reporting, financial statement, and management reporting is do you? So, you thought you shall ridicule my personal observations by presenting some copied off information available at the internet. Well, your ill information about something is not going to turn a theory around. Therefore, let me shatter that confidence of yours, shift your eyes to the image inserted in the article and tell me, is it not saying PAMA figures? Now recall Math, if you know what it is, and then do enumerate whether an actual figure shall be generated if a single formula is containing an estimate and an actual figure?
Nevertheless, I believe that you do not care, after all, you think that buddy means being sarcastic, a Toyota Land Cruiser Prado, Land Cruiser250, Land Cruiser J70 and Toyota Land Cruiser are same, you cannot even vary a new and an old car. By the way, you believe that there is an EV Corolla out there don’t you, yes, a knowledgeable person can see who is ranting. After all they saw through Imran Khan’s charade, did they not?
@Khurram
🤯🤦♂️
It’s fascinating the way your mind works. Don’t have a good point to make, start throwing around big words. What have they got to do with this? This data is showing a simple fact. Sales are way down. Profits are way up. This year is 2033 not 2022. Why are you sharing annual reports from a year ago to explain this? And does that explain what is going on now in any way?
Yes, they are all land cruisers. Just from Different eras. I did not name them. Toyota did. It called them all land cruisers. The issue was you having a problem with the new 250 being called the Prado. Why is that such a sticking point for you whether Toyota ITSELF ends up naming it that in different markets? Toyota named them that way not me. Take it up with Toyota if you find that so offensive.
I get it. For you “new” means it should smell “showroom fresh”. It doesn’t matter what you get. The local corolla is the 11th gen corolla that was introduced to the world in 2013. That is a simple fact. No matter if you get a “showroom fresh”, “zero meter” one from the dealership. The fact remains; It is a 10-year-old car. Deal with it, or don’t, your choice.
Enough with the EV, buddy. Its just getting sad at this point. 🤷♂️ Its an EV sedan made by BYD
for Toyota because Toyota didn’t have the tech or expertise to do it themselves in this short a time. Again, deal with it, or don’t. Your choice.
“Well, your ill information about something is not going to turn a theory around” If you mean facts, you are absolutely right; IN YOUR OWN CASE! What I have said are cold hard facts. All your conspiracy rants will not change those. Again; deal with it, or don’t. Your choice.
The data used in the chart is from PAMA. So, are you saying and/or admitting that the source of the data is not reliable? You still have not answered my question. If this practice is so wrong. Why do big companies give sales and profit and growth projection for the next few quarters or years using such techniques? Why does Toyota do it itself? Are you saying they are being dishonest by doing this simple business practice?
Like any normal person I look for the explanation of things online and learn. And then, like any normal person, form an educated explanation about the matter. If that is not what you do, then what DO you do? Invent all your “facts” by yourself? It certainly sounds that way.
@Ali Khan
Khan sb do not digress, do not rave, open your eyes and reread my comments. I have written about segmenting revenues, and using audited annual report for computing profits, before you butted in debate that was aimed at author by the way.
Furthermore, where exactly have I said that PAMA data is a lie? I have talked about actual and assumed data, and by actual I meant PAMA, but guess what you did not read that term did you?
As for assumed data, well…were the assumed data coming from Toyota then caption beneath image shall have read data taken from assemblers rather than saying estimated using financial statements. Oh my, am I speaking an alien language? Well, I cannot help you, I guess internet shall.
P.S. One more thing, you are blasting two lies firstly, there is no such thing as BYD designing Toyota cars for Chinese market. But I guess the numeral 50%* is invisible to your khan sb brain is it not? Secondly my issue was not with Toyota Khan sb, rather you and author denying differences between different versions of Land Cruisers was the problem. Thirdly you are trying to buddy up with me and that is unacceptable.
P.P.S. Corolla is new, if you cannot take it then stop lying about it because I have taken it upon myself to negate your baseless comments.
*https://www.bydeurope.com/article/303#:~:text=BYD%2C%20Toyota%20Agree%20to%20Establish%20Joint%20Company%20for,research%20and%20development%20for%20battery%20electric%20vehicles%20%28BEVs%29.
@Khurram
Arguing for the sake of argument again, are we? Your “explanation” about PAMA data. WOW! 🤯
The caption on the chart in question clearly says “Estimated using financial statements of the listed companies and volumetric numbers for the period published by PAMA”.
Keeping that in mind, why should we doubt the data presented? Seems like it is using “actual data” from PAMA. And the ‘estimated using financial statements’ that you seem to have a problem with; Again, from the subject matter that is being presented in the given chart, who’s financial statements do you THINK were used? There is no assumption here. It is based on actual data by PAMA and the assemblers. But I’m sure you will find something to carry on your… instance to the contrary. 🤷♂️
BYD is MAKING the car for Toyota. I never said design. The design is Toyota. It has to be. The Batteries, the motor/powertrain are all BYD.
*https://thedriven.io/2023/04/19/toyota-launches-bz3-its-first-full-electric-sedan-driven-by-byd-powertrain/
You can get the Corolla fresh from the showroom in Pakistan. However, a simple question for an expert like you buddy. The Corolla sold in Pakistan is the 11th gen that was launched in the world in 2013. Is the 11th gen still the latest generation of the Corolla in the world? WHAT IS the latest generation of the corolla currently in the world and when was it launched?
No, there was no “denying of difference” by anyone. The author simple stated that this new 250 Land Cruiser might be / will be named the new Prado in some markets. That is just good business. Going with a name that is recognizable, why is that bad? Why should Toyota not do that? Don’t they have a right to market and sell their product as they see fit to maximize sales? Seeing from the examples below, its already happening in other countries.
*https://en.wikipedia.org/wiki/Toyota_Land_Cruiser_Prado#Fifth_generation_(J250;_2023)
*https://www.dubicars.com/news/toyota-land-cruiser-250-unveiled-the-return-of-the-light-duty-prado.html
*https://www.carexpert.com.au/car-news/2024-toyota-landcruiser-prado-revealed
*https://www.citizen.co.za/motoring/all-new-toyota-land-cruiser-prado-becomes-reality/
All proof of what the author on PW said was accurate. In all these places its going to be the new Prado. So that means Toyota itself does not know the difference between its products then. 🤯😨
Yes, the internet did help and I think I have given enough basis for my comments. Don’t you?
What am I saying? 🤷♂️ Of course, it’s not enough for you, is it? 🤣
@Ali Khan
Have you a memory loss or something? Khan sb you and author aren’t even talking about Land Cruiser Prado. You may lie and fool me but that is not hiding your idiocy.
As for BYD, did you read the terms 50 percent and collaboration of resources? Or your eyes are too old to see that words are different from making?
That reminds me. Are you an engineer? No, you are not qualified to call Corolla old.
One thing more, estimates, well I think I have created a wall around your lies that is high enough to make an educated person realise what I am talking about.
You are not one because you are a Khan sb and therefore can never appreciate details.