After a steep decline in FY09, domestic passenger car sales are once again showing signs of improvement on monthly basis. New fiscal year has started off on an optimistic note for the auto industry.
Car sales continued to progress on path of recovery as August sales depicted a growth of 11 per cent, month on month basis, to 8,441 units as against 7,614 units in the previous month, a sixth consecutive month on monthly rise, as revealed by Pakistan Automotive Manufacturing Association (PAMA).
Some of the reasons for improved car sales are decline in automobile prices, higher taxes on imported cars and economic stability. The situation appears even more stable on year on year basis with strong improvements of 31 per cent. However, because of a lower count in the similar month last year, the numbers portray massive growth in the month.
Importantly, during the first three months of FY09, car sales numbers were unusually low due to phase-out of Corolla’s previous model. In 1Q of FY09 (JulñSept), corolla’s sales averaged at 640 units as against 2,760 units in rest of the period of FY09.
Economic slowdown, limited avenues for auto leasing and record domestic inflation had hit the consumers hard, mostly affecting the lower-end cars. However, with the recovery in domestic economy along with the price cuts by PSMC (dominant player in 850cc segment with 85 per cent market share) the demand for low-end cars has improved. In addition to this, high-end segment cars are becoming less affordable.
In August 850cc segment’s unit sales increased by 38 per cent to 2,362 units as against 1,708 units in the preceding month, while unit sales of 1300cc and above segments dropped by one per cent to 4,326 units. Pak Suzuki remains the major beneficiary as a dominant player in the economy-class segment.
Pak Suzuki is benefiting from its pricing strategy. On monthly basis, it is showing consistent recovery. In August, car sales of PSMC surged by 26 per cent to 3,758 units as against 3,002 units in the preceding month. In order to recapture the lost market share and to achieve economies of scale, the company had cut its prices (2-6 per cent) in April 09 on most categories. Furthermore, in June the company had completely passed on the impact of removal of five per cent FED on cars above 850cc. Later on, in July, the company again reduced prices of its 850cc and below segment cars (approx 70 per cent share in total sales). With the recovery in sales, market share of PSMC improved to 45 per cent during August 2009 versus 39 per cent in July 2009. However, on yearly comparison in August, sales of Pak Suzuki posted a decline of eight per cent, while its market share shrank to 45 per cent versus 64 per cent in same month of FY09.
Indus Motors, a market leader, depicted a marginal increase of three per cent in its car sales in the month of August at 3,551 units as compared to 3,455 units in July. However, on year on year basis, this indicates a jump of 2.85 folds.
A hefty jump in sales was largely due to low base in the last year’s similar month. During the month, Indus Motor’s market share dropped by 3pps to 42 per cent as compared to 45 per cent a month earlier. However, on yearly basis, this indicates an increase of 23bps in its market share.
On the other hand, in August HCAR unit sales were recorded at 1,053 units, down by eight per cent on month on month and two per cent on yearly basis. Its market share remained at 12 per cent, down from 15 per cent in the month of July.
(Courtesty: The News)