Automobile Sector 1MFCY10 Review

Showed a healthy jump of 32.43%YoY
The latest sales figures of Pakistan Automotive Manufactureres Association (PAMA) for July 2009 depict that car sales are gradually picking up month on month basis; however there is still a long way to go for the auto industry. The sales figures reported for the month of July showed a healthy jump of 32.43% to 9,820units compared to the 7,415units in same month in 2008. The figures have also shown an improvement of 8.07% compared to 9,087units in June 2009.
800CC segment leading the recovery
The recovery in sales is lead by the 800CC category which has shown a healthy growth of 13.3% MoM. Honda City and Corolla in the 1300CC range have also witnessed some improvement in sales, the overall MoM growth in this segment is recorded at 9.12%, and the total number of units sold stood at 4,335. 1000CC segment made the sales growth of 5.85% having 1,555units sales in July compared to 1,469 units in previous month; SUVs and LCVs segment showed the negative sales trend by 13.41% and a sales figure of 1,330units in current period compared to 1,536 in last month. The main contributor was Pak Suzuki with 4,966 units sales followed by Indus Motors with 3,586 units while Honda Atlas Cars and Dewan Motors with 1,140 and 128 units of sales respectively.
Withdrawal of FED helped boost the sales...... but high financing cost is still a dragThe government took a decision to reduce the Federal excise duty on CKD units in the recently announced budget this has helped the car manufacturers in reducing the prices of the cars which in turn helped the sales figures. However the high consumer financial cost and the reluctance of the banking sector to push the car loans aggressively is not helping the cause of the car manufacturers.
The Cars’ Sales decline by 49.68%YoY and SUVs & LCVs’ sales decline by 27.67%YoY. The segment which conceded the biggest shock was 1000CC car category with an average downturn of 71.40% in sales. The recorded downturn was in effect of increase in automotive prices caused by 19% PKR-USD Parity (81.39 in June 2009 from 68.40 in June 2008) which increased the cost of imported completely knocked down (CKD) kits and limited financing due to increase in interest rates.
Indus Motors (Toyota).
Toyota corolla remained the highest selling car with 3,124 units sales, continuously maintaining number 1 slot since October 2008. In spite of July-2008 to June-2009 sales volume which declined by 20.45%YoY, it has improved its market share by further 2 points to 36% this month. The year which started with a sizable hit of 80%QoQ downturn in 2009 with the earlier model is gradually being reversed; it stoutly bounced back to 275%QoQ increase in 2nd Qtr of 2009 leading to a growth of 13%QoQ in next quarter, while the last Qtr depicted growth of 17%. In July 2009 Corolla has made 3% sales growth. On the reversal side of this the sales of Daihatsu Cuore, went down by 52.05%YoY in FY09, then we’ve seen sales to get back into the positive numbers with 22% jump MoM basis in June, and in July 2009 the numbers are again showing the negative sales growth of 17% by selling 331 cars compared to last month figure of 397 cars.
Pak- Suzuki
The highest sales in July 2009 were made by Pak Suzuki with 4,966 cars. The main reason for this spike is mainly due to the cut in prices of vehicles on celebration of 1 million vehicle sales by Pak Suzuki since its operations in Pakistan. With the exception of Liana and Alto all the products of Pak Suzuki has shown tremendous sales surge in the previous month, mainly due to the concerted effort on marketing by the company. The sales figures were lead by Bolan with whooping increase of 69% in MOM sales. Ravi and Mehran also witnessed healthy growth in July with MoM growth of 38% and 21% respectively. Very Surprisingly ALTO seems to be loosing its market and probably conceding to Core and foreign competition in 1000 cc category. While Liana remains weakling in Suzuki family, as it faces hard time with completion from Honda City and Corolla Xli in 1300CC range.