The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
The Pakistani auto sector presented a mixed picture as we entered 2012. Looking at data for the first half of FY12 (July-December), new vehicle production was down by just over 15%, while new vehicle sales were also down, by 6.3% y-o-y. Impacting on production levels was a lack of spare parts for auto assembly as a result of the recent devastating flooding in Thailand, which has had knock-on effects on regional vehicle assembly lines. Indeed, Honda Motor reported no passenger car production at all in Pakistan for December 2011.
According to figures from the Pakistan Automotive Manufacturers Association (PAMA), for the half-year ending 31 December 2011, a total of 92,295 four-wheeled vehicles (passenger cars, trucks, buses, LCVs, jeeps, pick-ups and tractors) were produced in Pakistan, marking a 15.7% decline on the 106,810 fourwheeled vehicles produced in H1FY11.
The major domestic cause of the decline in overall vehicle production was a sharp reduction in tractor production by Fiat and Massey Ferguson. Fiats tractor production fell by 236% y-o-y, while Massey Fergusons tractor output was down by 109% y-o-y. Fiats local producer Al Ghazi Tractors suspended tractor production for two calendar months (August and September 2011) in response to a collapse in demand from farmers following the governments decision in March 2011 to increase the general sales tax (GST) on tractors to 16%. In December 2011, both Al Ghazi and Masseys local producer Millat Tractors suspended production.
The tax hike has also had a devastating impact on tractor sales, which fell from 8,047 for the month of December 2010 to just 771 for the month of December 2011. Six-month sales stood at just 12,665 for July-December 2011, down from 32,743 for the same period in 2010. The fall in production and sales has also led to extensive job losses within the tractor production industry.
In response to this collapse in tractor production and sales, the cabinet subcommittee on agriculture recommended in January 2012 that this GST should be immediately cut to 5% in order to help farmers afford tractors once again, according to a report on the Dawn.com news website. The same report also stated that the cabinet subcommittee on agriculture had ordered Zarai Taraqiati Bank to resume soft loans to farmers for the purchase of tractors in order to boost demand.
Looking at overall new vehicle sales, PAMA figures showed a 6.3% annual decline over the July- December 2011 period, to 95,967, from 102,429 vehicles sold over July-December 2010. Again, tractors saw the biggest fall in sales, down by 158.5% y-o-y. Trucks and buses also saw a 33% annual fall in sales, although the pick-up segment actually saw a 21% increase in sales, to 9,772 units. Although the outlook for the overall new vehicle market looks clouded, passenger car sales and production levels remain relatively robust. Indeed, new passenger car sales were up by 20.5% y-o-y at 71,886 units, while new car production was up by 9%. Given this strong start to FY12, we have now revised upwards our forecast for new car sales. We now feel that a total of 132,550 cars can be sold over FY12, an annual increase of 3.5%.
In addition, over the 6MFY12 period, a total of 416,642 motorcycles were produced in Pakistan, marking a year-on-year (y-o-y) increase of 7% on the 389,495 vehicles produced during the half-year ending December 31 2010. New motorcycle sales stood at 419,087 for the six-month period, up by almost 8% on the 388,215 vehicles sold over the half-year ending December 31 2010.
BMI believes that passenger cars and motorcycles will likely continue to be the strongest sub-segment performers within the wider auto industry over the near term. Suzuki Motor remains the best-selling manufacturer within Pakistan, selling 50,718 passenger cars and pick-ups over H1FY12, for a market share of 62%. In second place is Toyota Motor, which sold 24,066 passenger cars and pick-ups for a 29.5% market share. Toyota also produces the best-selling model in Pakistan, the Corolla. In third place is Honda, which sold 6,861 cars, for a market share of 8.4%.
Click for Report details:Pakistan Autos Report Q2 2012