By Aamir Shafaat Khan
KARACHI, Nov 13: Growth in sales of car has slowed down. After three years of double-digit growth car sales in July-October grew by eight per cent. The sales had been showing 20-30 per cent monthly growth for the last few years.
Experts attribute slowdown to laggard sales of Honda Atlas and Dewan Farooqui cars in the last few months. In July-October 2006, Honda Atlas and Dewan sales plunged by 42 and 22 per cent, respectively, as against an increase in sales of Indus Motors Limited and Pak Suzuki Motors Limited by 38 and 19 per cent, respectively, compared to July-October 2005.
In July-September 2006, the growth in car sales was recorded at 10 per cent over the previous period. Figures released by the Pakistan Automotive Manufacturers (PAMA) revealed total sales of 50,707 cars in July-October 2006 as compared to 47,110 units in the same period of 2005.
Sales of Honda Atlas dropped to 5,829 units in the last four months as compared to 10,087 units in the same period last year, while sales of Dewan Farooqui Motors Limited plunged to 3,481 units from 4,472 units.
The PAMA figures show that Indus Motors’ sales rose to 15,659 units as compared to 11,332 units, while sales of Pak Suzuki Motors Limited surged to 35,146 units from 29,647 units.
Raza Ansari, general manager marketing, Indus Motors Limited, admitted that the growth in car sales was on the decline because of tight car financing policy adopted by the State Bank of Pakistan in order to avoid default. However, he said the decision would benefit in the long run.
The huge arrival of used cars in the last fiscal year is still impacting the local sales despite the fact that imports of second-hand cars have been declining for the last few months.
Mr Ansari said unsold stocks of used cars were still parked at the showrooms while some 1,000-1,500 units are still arriving every month. However, he ruled out any big impact of the rising interest rates on car financing on the local industry sales. Car financing rates have surged to 14 per cent from 10-11 per cent last year.
Mohammad Sohail of Jehangir Siddiqui Research said that on month to month basis, October 2006 sales had declined by 20 per cent to 10,633 units as compared to 13,354 units in September 2006.
He attributed the decline to reduced working hours in Ramazan during October and extended Eid holidays that also caused a 23 per cent decline in production in October as compared to September.
However, he said the rising interest rates (14-15 per cent on car financing) could be attributed as the main reason in falling sales of locally assembled cars. Two years back, interest rates were ranging between eight and nine per cent.
Mr Sohail said that tight car loaning policy by the State Bank and unsold stocks of used cars were the other factors that put pressure on locally assembled cars.
An analyst said that Honda Civic was losing the market because of price competition with imported cars, while Hyundai Santro sales were hit by the huge presence of used Toyota Vitz.