business
Tuesday Sep 13 2022
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Raw material supply curbs push down auto sales in August

A representational image of cars being loaded on a car-carrying trailer. — Reuters/File
A representational image of cars being loaded on a car-carrying trailer. — Reuters/File

  • Pakistan’s auto sales declined 2% to 14,000 units in August.
  • Primary reason behind this decline was unavailability of CKD parts.
  • On a yearly basis, auto sales are down by 46% amid rising car prices.


KARACHI: Due to the unavailability of key raw materials in an effort to curb the current account deficit (CAD), Pakistan’s auto sales declined 2% to 14,000 units in August 2022 when compared with July 2022.

This drop includes sales of non-Pama (Pakistan Automotive Manufacturers Association) members, as per a Topline Research report.

The report highlighted that the primary reason behind this decline was the unavailability of completely knocked down (CKD) parts which led to non-production days by auto manufacturers.

It should be noted that in order to save foreign exchange reserves, automakers were allowed to import only 50% of their average imports over the last four months in July. The quota has increased to 60% for August and 70% for September.

Meanwhile, on a year-on-year basis, auto sales were down by 46% amid escalating car prices, expensive auto financing, and low purchasing power of consumers.

Resultantly, car sales for the first two months of the ongoing fiscal year 2022-23 clocked in at 23,498 units down 50% year-on-year from 46,656 units in the same period of last fiscal year.

Speaking to Geo.tv, auto analyst Arsalan Hanif said: “The decline in auto sales on a monthly and yearly basis is due to supply constraints of key raw materials because of restrictions as companies need to obtain prior approval for imports.”

“As a result, original equipment manufacturers (OEM) were unable to operate at full capacities and the biggest OEM (Pak Suzuki) extended its automobile plant shutdown due to a lower level of inventory,” he added.

Company-wise sales

Pak Suzuki Motor Company sales were down 41% month-on-month to 3,954 units in August 2022 due to plant closure amid the unavailability of CKD parts.

Honda Atlas Car (HCAR) also recorded a decline of 29% month-on-month to 1,809 units in August led by a decline in sales of city and civic by 40% month-on-month.

Indus Motors (INDU) posted an increase of 63% month-on-month to 3,876 units in August from 2,375 units in July.

Interestingly, Hyundai sales increased to 1,929 units in August as compared to 201 units in July led by an uptick in Tuscon sales primarily due to the low base.