In Car Industry: The good, the bad and the Ridiculous

By Nabila Mujtaba · Saturday, Mar 10, 2012 3 Comments

Car sales continued to cruise –rising 17% in the current financial year so far – despite industry players increasing prices on a regular basis.

The growth primarily resides in the 1,000cc and below segment – which includes Suzuki Mehran and Diahatsu Coure – as its sales grew by at least 30%. Sales in the 1,300cc and higher segment – which includes Honda Civic and Toyota Corolla – grew by a meagre 1% in the period under review.

Sales stood at 98,252 units in the first eight months of fiscal 2012 against 84,225 units sold in the same period of the preceding year, according to data released by Pakistan Automotive Manufacturers Association on Friday.

The strong growth can be attributed to the rise in remittances and the yellow cab scheme offered by the Punjab government, said analysts.

Industry players have protected profit margins from rising costs or currency depreciation by increasing prices on more than one occasion in the current financial year.

Indus Motors raised its product prices thrice, while Suzuki jacked up prices twice since September 2011, according to a JS Global Capital research note.

Pak Suzuki Motor Company, the major player in the lower segment, posted a strong growth of 35% to 70,162 units during July 2011 to February 2012.

Mehran and Bolan, prime beneficiaries of the yellow cab scheme, grew by 37% and 47%, respectively. The Punjab government allocated Rs4.5 billion in fiscal 2012 budget to provide 20,000 yellow cabs to youth of the province.

Moreover, sales of latest arrival to the Suzuki family Swift reached 4,500 units, up a gigantic 86% compared with 2,420 units sold in the same period last year.

Overall, the company’s market share improved to 63% against 54% in the same period last year.

Indus Motors growth remained subdued with sales growing by a dismal 4% to 34,366 units compared with 32,991 units in same period last year. The company’s flagship product and the country’s highest selling car Corolla posted a growth of only 5% despite the company adding new variants of the car in the 1600cc segment and CNG vehicles.

Sales have been adversely affected by reduced farm income this year on account of higher input cost – fertiliser and other products – and reduced product prices particularly cotton, said Khan.

Cuore sales experienced a substantial decline of 34% to 2,765 units ahead of its complete shut down at the end of the financial year. The company announced earlier that it plans to pull the plug on Coure before June 30, 2012 on account of its high cost of production.

Honda’s production woes continued as it stood at a standstill for the third straight month in February due to unavailability of parts, PAMA data shows. Honda all around the world has been facing shortage of parts since October because of floods in Thailand.

Production is likely to be back on track in March as the company’s Lahore plant was expected to restart operations at the end of February, according to an announcement on its official website. Sales of Honda Civic declined by a massive 37% to 2,781 units and sales of Honda City slumped by 29% to 4,243 units during July 2011 to February 2012.

Similar Posts:

• Fast and Furious: Indus Motors Made Rs 290 Crore in Last 9 Months
• Suzuki in High Gears: Recorded Rs 79 Crore in Profits
• Atlas Honda Planning to Rock Motorcycle market by investing a Massive Rs 475 Crore
• Lucky Cement Gets Extremely Lucky. Double Profits Posted
• Meezan Bank Join Hands with Pak Suzuki to Provide Car Ijarah on Lower monthly rental