Auto sector chokes as sales plunge
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KARACHI: All segments of auto sector faced demand contraction during the first quarter of this fiscal year with car sales plunging by 39.4 per cent to 31,107 units compared to 51,221 units in the same period last year.
Similarly, there was a drop of 49.7pc in trucks, 26pc in buses, 31.6pc in tractors, 58pc in jeeps, 48pc in pickups and 19.5pc in two/three wheelers.
Frequent price increases by assemblers on falling rupee, imposition of federal excise duty (FED) by 2.5-7.5pc in various engine powers and additional customs duty on imports of raw material had hit car sales hard.
Auto financing also shrank owing to very high interest rates. Motorcycle and other vehicle rates had also been raised multiple times owing to currency devaluation.
However, in September, car sales slightly improved to 10,923 units, from 9,126 units in August but it could not avert a big slowdown in the overall quarterly figures.
WagonR suffered a massive fall of 73pc to 2,168 units, followed by 68pc in Honda Civic/City to 3,926, 58pc decline in Toyota Corolla to 5,503, 59pc dip in Suzuki Swift to 524.
Similarly, Suzuki Cultus, Mehran, Bolan sales plummeted by 25pc, 85pc, 71pc to 3,598, 1,249 and 1,106 units, respectively. Meanwhile, Alto660cc sales stood at 12,943 units.
Truck sales, dubbed as barometer of trade and business, plunged to 874 units, from 1,738. Hinopak, Master and Isuzu sold 365, 121 and 388 units as against 652, 285 and 801 in the previous quarter.
In August, a Ghandhara Industries Ltd (GIL) official said its Isuzu brand had remained the top truck seller in FY19 and sales were less affected than competitors due to strong quality and best after sales services. But 1QFY20 data contradicted the claim as its sales decreased to 368 units, from 801 with 68 units sold in August and September each.
Despite some headway in new infrastructure and motorways, bus sales went down to 196 units from 267 units in which Hino, Master and Isuzu sold 91, 39 and 66 units as against 103, 74 and 90 units.
Toyota Fortuner, Suzuki Ravi, Toyota Hilux and JAC sales fell to 266, 1,559, 938 and 138 units from 606, 3,614, 1,617 and 205. A 59pc drop in sales of Honda BR-V was recorded to reach 528 units.
In tractors, Fiat saw its sales rise by 24pc to 4,470 as against a 52pc decline in Massey Ferguson to 4,829 units.
In two and three wheelers, Honda and Suzuki sales depicted declines of 12pc and 11pc to 235,116 and 5,018, while Yamaha posted only 1pc decrease to 6,212 units.
United Auto Motorcycle and Road Prince Motorcycle sold units came down by 26pc and 35pc to 81,012 and 29,399, while Ravi’s were lower by 54pc to 3,497.
Saazgar and United three wheelers sales went down to 2,403 and 1,401 units, from 4,440 and 3,176 whereas Road Prince’s inched up to 1,628, from 1,588 units.
Published in Dawn, October 12th, 2019
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Comments (55) Closed
Oct 12, 2019 08:16am
Auto sector should increase manufacturing to cut costs rather then milk money by assembling older models for local use. If their manufacturing was mostly local then that would sell cars cheaper and people would buy them.
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Oct 12, 2019 08:45am
Higher auto sales does not mean better economy, but it does mean more people carrying debt. So, in a developing country, the focus should be more on public transit than vehicle ownership. Car is still a luxury in Pakistan!
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Oct 12, 2019 08:46am
monopoly of honda, toyota and Suzuki should be ended now. Good that Govt is tightening screws against these auto brands. Hopefully cheaper but world class brands like KIA,Hyundai will chip in now
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Oct 12, 2019 09:00am
Maybe now the auto industry will start competing with quality products, and try to win over customers
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Oct 12, 2019 09:12am
For decades these auto manufacturers have enjoyed by selling us sub standard vehicles, bribing every one from govt , fbr, road fitness to quality control, ON money scams and importing parts and issuing fake certificates of them being locally manufactured and what and what not . So now all their bad deeds have come back to haunt them.
It’s time they start developing local manufacturers and making quality products bring the price down making cars affordable.
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Oct 12, 2019 09:21am
Worldwide phenomenon. They reduced price.
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Oct 12, 2019 09:36am
Who will buy at these prices
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Oct 12, 2019 09:49am
Much much worse in India sir.
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Oct 12, 2019 09:57am
Time to buy motorcycle
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Oct 12, 2019 10:10am
Expected....with unemployment rate so high and scarce cash flow, who will be buy car?
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Oct 12, 2019 10:16am
They had decades to localize production, but instead sold older cars with less safety features and milked a lot of money.
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Oct 12, 2019 10:16am
Automobile is the lifeline of economy growth
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Oct 12, 2019 10:37am
It’s time to start manufacturing locally.
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Oct 12, 2019 10:51am
less cars on the road is better
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Oct 12, 2019 10:58am
@Mumbaikar, How ?? Isn't auto price too low in India as compare to Pakistan ?
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Oct 12, 2019 11:00am
They are robbing citizens with outdated modalities and manufacturing. .it happens only in Pakistan since these bigwigs are in cahoot with our power elite. .
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Oct 12, 2019 11:13am
Let's switch to good old bicycles.
No carbon emissions.
No burden on the exchequer in buying petroleum products.
Improved health.
Lesser traffic congestion.
I want to see The Khan promote bicycle riding.
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Oct 12, 2019 11:14am
@Adil Jadoon, who will make such a large investment? There is so much uncertainty.
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Oct 12, 2019 11:29am
Blackmoney stream has come to an end. Hence no one is able to buy expensive imports.
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Oct 12, 2019 11:38am
PAMA umbrella compromised Road Safety standards by WHO/UN which made the Pakistan made cars not acceptable to export under Road Safety. This is the main cause of not export. All Pakistan made cars are international brands acceptable worldwide. The day when PAMA accept Road Safety Standards of WHO/UN Geneva they can be easily exported to China under the bilateral treaty with China which is called bilateral trade treaty/protocol. Details available with UN/WHO Road Safety. There is no crash test simulator, which indicates the passenger safety. Details are long, which all stake holders knows very well. Sooner the better.
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Oct 12, 2019 11:57am
Local Manufacturers claim that thier products are 50% local and 50% imported. If we see currency devaluation down to 3% we then see an increase of 5%. Government should reduce duties on imported small cars so that consumer should get what they pay.
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Oct 12, 2019 12:01pm
Govt should form semi government institutions with disciplined persons appointed as contract labour managers clerks to purchase vegetables rice food grains everything from farmers and sell with no profit no loss basis. Thus salary of employees be paid and have fair price employment with no mediator stocks for pricing getting high
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Oct 12, 2019 12:04pm
the entire cabinet of Imran khan and PM must be removed immediately. They are damaging own house. that's it. economic hitmen
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Oct 12, 2019 12:08pm
Auto sector is being rationalized which was long overdue. It needs to either get efficient and competitive or get out of business. No more free rides by the government and huge profits at the expense of consumers
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Oct 12, 2019 12:14pm
All these models sold at extortionate prices are abandoned models in the manufacturing country that they still want to milk money and dump these on us. Good that they don’t sell. Bring us the current models and see how people will be buying it in quantities.
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Oct 12, 2019 12:34pm
a good news: there are all sort of vehicles in this country, especially Karachi, but public transport. Government needs to invest in quality public transport infrastructure rather than handing over licence to cars and motorcycles. this country is a show-off and less care about the environment
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Oct 12, 2019 01:09pm
The Cars, trucks and bus assembler should ask their principals to allow them to export their products to the neighboring countries. Right Hand Left hand Drive is not a big issue. The key problem is that the Principals in Japan do not allow their subsidiaries and joint ventures to export the products to neighboring countries and to Africa! Pakistan based vehicles manufacturers should be compelled to export their products and earn this much foreign exchange which they need to import the spare parts and ckd units which runs in billions of dollars. If Toyota in Thailand can export Fortuner and Vigo to Pakistan Why Toyota Pakistan ( Indus Motors) can’t export its products to Africa and other countries. The auto manufacturers in Pakistan need to build their capacities and quality standards to meet world standards!
Government should not allow Auto manufacturers to import ckd units and parts until they prove their exports and earn their own Foreign Exchange!!
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Oct 12, 2019 01:22pm
@salman, Auto Manufacturers in Pakistan are the biggest drain on Pakistan‘s Foreign Exchange. They import CKD units and parts in billions but do not bring in any Foreign Exchange by exporting their products to neighboring and Africa for two reasons:
1.Their products are not of international standards
2. Their principals in Japan ( Toyota, Honda, Suzuki, Hino etc) do not allow them to export their products out of Pakistan . Government of Pakistan should impose and control that the Auto Manufactures have contracts with their principals to freely export their products. No foreign exchange should be released to auto manufacturers until and unless they export their products.
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Oct 12, 2019 01:30pm
Another big reason not mentioned is that people have to declare assets and income to buy car.
Lot of black economy has been shut down, so its a good thing car sales are down from ill gotten wealth.
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Oct 12, 2019 01:34pm
The overall picture would have been much brighter, had these companies truly invested in research and development to achieve localisation. It would been in the mutual interest of the company, clientele and the economy in general.
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Oct 12, 2019 01:56pm
Corolla Altis and Civic are now costing around 3.8 to 3.9 million. This is way too much. But despite dropping sales, no auto manufacturer has reduced prices. This means that they are trying to strong-arm the government into giving them benefits. Suzuki raised price of its 660 cc Alto to above 1.5 million from 1st October. This is an oligopoly. The government must not succumb to their pressure tactics.
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Oct 12, 2019 01:57pm
It's a good sign from the perspective of pollution, environmental issues, global warming. acute traffic congestion, CO2 gasses, smog and exuberantly high prices of automobiles in the greenshirts land.
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Oct 12, 2019 02:13pm
@Anonymouseee,
Who will invest ?
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Oct 12, 2019 02:20pm
I am sure that the owners and decision makers in the Pakistani Auto industry are least perturbed if the factories stop production altogether. They have enough personal wealth to last them for generations and their workers welfare is nothing to worry about.
Normally in lean times manufacturers reduce prices by forsaking profits and pressurizing suppliers to do the same to keep the production lines moving. In Pakistan it is the opposite , two companies decide to lay off workers and the third finds an opportunity to make an extra profit.
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Oct 12, 2019 02:22pm
I think that is good news for Pakistan. It means firstly that people are now living within their means and the real state of the country and economy is visible. Two it decreases the oil imports. And thirdly as most components of automobiles assembled in Pakistan are imported the import bill also will decrease. And last but not the least it means less pollution. Pakistan going truly green.
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Oct 12, 2019 02:36pm
bvz people have to declare where money came from.....this is the scale of corruption money.
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Oct 12, 2019 02:37pm
As part of the austerity drive better drive the old vehicle instead of buying the new one. For the sake of auto sector employees it is recommended that manufacturer should bring down there profits to 50% so sales get better or else think about launching new chain of Car Rental business, increase employment opportunities as it is a pay back time to nation.
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Oct 12, 2019 02:44pm
Regulators should push for more safety features as these automobile manufacturers in Pakistan were missing all safety features offered in other countries.
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Oct 12, 2019 03:12pm
Lot of good news coming out of
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Oct 12, 2019 04:11pm
Wow what a great comments form PTI lovers, buy bicycles, eat grass instead of proper food, start wearing cardboard boxes instead of clothes (though they also becoming expensive), while commenting from their lavish setup, as mostly supporters are government employees, so they dont know the situation of private sector and neither they know a thing which called "COST OF PRODUCTION" which is getting higher and higher due to taxes and every bad economy policy at the cost of not doing privatization and neither decreasing government expenses, to which people here in private sector losing jobs by every passing second.
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Oct 12, 2019 04:55pm
Please stop using word auto manufacturing it auto assembler we do not make cars and trucks in Pakistan. Only time price will come down when Pakistan will develop 100% manufacturing.
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Oct 12, 2019 05:02pm
Auto sector has not reduced it's margin of profit, increase in $ rate has been added into sale price thus increasing the price to unafordable level. They should absorb part of $ increase and reduce their margin of profit.
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Oct 12, 2019 05:48pm
These models are capable of time-travel. Take us to 1980s .
Sure winners in any vintage-car rally.
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Oct 12, 2019 05:54pm
Cars are a pest, they choke roads, streets, they are a complete waste with one person using a vehicle for many a rides. I live in a country where the government despite pressures from car lobbies is making car ownership difficult......but they have sensibly introduced wonderful user friendly public transport systems which are now bearing fruits.
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Oct 12, 2019 05:59pm
When import of cars is allowed to generate cheap revenue, the local industry could not survive . Government is responsible for this misery . This is a very bad message to foreign investors !
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Oct 12, 2019 06:04pm
The policies and regulations are set by the government and now auto industry. Private sector should not be blamed for this . If they are selling sub standard automobiles at higher prices then government has to be blamed , which had failed to make law and regulate them and set a mechanism of check and balance !
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Oct 12, 2019 06:33pm
It's good.. Let this be a lesson for them. They've been milking general public since forever
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Oct 12, 2019 06:41pm
@Hani_Layyah, modi has improved metro rail betwork
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Oct 12, 2019 07:20pm
Government should standardise the auto industry to just two makers, so as to economise on production. Rest of the plants must be converted to produce high specification vehicles for export.
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Oct 12, 2019 07:29pm
Pakistan does not need high auto sales.. rather better transport system. How about investment in electric cars. I heard toyota and Tesla is interested.
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Oct 12, 2019 07:49pm
Bad news just keeps pouring in. IK and his team is hurting the economy in irreversible ways. Something's got to give soon
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Oct 12, 2019 09:30pm
@Hani_Layyah, Since the dollar rate is lower , therefore the prices are supposed to be lower .
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Oct 12, 2019 10:24pm
Very happy to see this sector suffer. For years theyve milked money from general public, its about time they should be taken to task
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Oct 13, 2019 01:20am
Car sales are not that important. Food, Health, Education and Jobs are the most important for common people. If the Government can deliver on these four things, then the people will be happy, and the Government will have nothing to worry.
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Oct 13, 2019 10:53am
The government is screwing auto sector very tightly,efficiently and very tightly. Auto sector had suck the blood of Pakistani people for long. Auto sector should cut its profit to facilitate people. I remember once Honda bike 70cc cut its price from 72000 to 52000 ,it happen when Chinese bike Hero and others enter Pakistani market.Also government should open ban on import if vehicle so the monopoly of these Big Three with no safety feature auto makers will end
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