ISLAMABAD – Pakistani automakers operated several non-production days overthe months and recorded a marked decline in both production and sales.Cumulatively in 7MFY20, cars and jeeps recorded a 44 percent decline insales and a higher 46 percent drop in production.
In January, the drop in both sales and production was similar, compared tosame month last year.
But it appears that month-on-month figures may offer some hope: car salessans Suzuki grew 87 percent in January against the same in December.
Analysts are pointing towards a recovery. They believe car sales havebottomed out in Dec-19 and a major impetus is coming beginning FY21 – thatis, over the next fifth months.
One wonders how the buying power of potential car buyers would flip soabruptly – to warrant this “impetus” – given it took these consumers awhile to bring this shift in the first place. By the end of FY19, whencommercial vehicle sales were declining, passenger cars were still selling.
Fundamentally, all demand drivers are depicting a negative trend. Cost offinancing is steep on account of the monetary policy holding ground.Inflationary pressures are still aplenty. Tax burden on consumption isstill high, and automakers are still raising prices.
Read Top Stories
In fact, Suzuki registered slightly higher sales in Dec (month on month)only because a new price hike was coming into effect in Jan-20 and carbuyers wanted to avoid that.
On the other hand, to the surprise of many, Large Scale Manufacturing (LSM)output data by PBS is showing growth of 9.66 percent in Dec-19 year on year.
Even if said recovery comes, it may not be too big a jump come FY21.Leasing costs may lower if discount rate comes down and purchasing powermay also improve. But cars will cost substantially more than they did say,two years ago. Are incomes growing at the same rate?
