Automobile demand dropped, auto industry abruptly effected

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Auto industry halts
Demand for Honda City, Civic, Toyota Corolla, Suzuki Bolan, WangonR has been dropped by 40 – 70%, during this fiscal year.

In another depressing development in the auto sector, the Millat Tractors Ltd (MTL) assembler of Massey Ferguson tractors on Tuesday informed the Pakistan Stock Exchange (PSX) that the company will halt production from Dec 11 till Jan 3, 2020. The production operations will resume from Jan 6, 2020. The decision comes after MTL sales plunged by 48pc to 8,223 units during the July-November period.

A Lahore-based MTL official told Dawn that the company had observed three non-production days (NPDs) each week in November but due to decline in booking orders, the company had decided to shut its operations by over 20 days.

He said the company had unsold inventory of over 3,000 units all over the country. “We have also sent our regular workers and staffers on forced leave,” he added.

However, sales of Al-Ghazi Tractors assembler of Fiat tractor also declined by 27pc to 5,741 units.

Coming back to cars, Suzuki WagonR and Honda Civic/City sales fell by 75pc and 70pc to 3,339 and 6,035 units respectively while Toyota Corolla and Suzuki Swift sales plunged by 59pc and 60pc to 9,657 and 859 units.

According to data released by the Pakistan Automotive Manufacturers Association, Suzuki Cultus and Bolan sales shrank by 35pc and 70pc to 5,691 and 1,949 units respectively. Overall car sales in November stood lower at 8,524 units compared to 9,569 units in October.

On the other hand, massive discount and different waiver schemes announced by Indus Motor Company in collaboration with commercial banks through car financing raised the sales of Toyota Corolla in November to 2,172 units from 1,982 units in October. Similar trend was seen in WagonR in November, edging up sales to 641 units from 530 units in October.

Alto 660cc appeared to have lost charm among buyers, as the model’s sales in November fell to 2,967 units from 4,048 units in October. Sales of Alto in July were 4,584, compared to 3,435 in August and 4,924 in September.

On the contrary, sales of Honda Civic/City, Swift, Corolla, WagonR and Bolan recovered in November but massive drop in Alto followed by Cultus models made a negative impact on cumulative car sales for the month of November.

Sources at Honda Atlas Cars Limited’s dealership network said the company would work only eight days in December as compared to seven days in November because of unsold inventory and depressed sales.

Honda had earlier observed 16-18 NPDs in October while it had reduced working days to 11 in September as against 13 in August and 20 in July.

Trucks sales, usually considered as a barometer of trade and business activity in the country, suffered 51pc drop to 1,440 units in the last five months while bus sales recorded 17pc decline to 312 units.

Falling sales trend continued in LCVs, jeeps and vans as Toyota Fortuner, Honda BR-V, Suzuki Ravi, Toyota Hilux and JAC sales stood at 476, 1,106, 2,548, 1,710 and 207 units as compared to 1,100, 2,116, 7,094, 2,436 and 354 units respectively.

In two and three wheeler segment, Honda sales came down by 7pc to 430,143 units, while Suzuki sales registered 9pc drop to 8,967 units. Yamaha sales inched up by 3pc to 10,711 units.

A 19pc cent drop was seen in United Auto Motorcycle sales — country’s second largest bike assembler to 144,294 units while sales of Road Prince Motorcycle stood at 53,889 units as compared to 79,625 units in 5MFY19.

Sazgar, Road Prince and United three-wheeler sales were 4,177, 3,406 and 2,575 units versus 6,479, 3,982 and 5,402 units respectively.

Hammad Akram at TopLine Securities attributed slow down in car sales to higher auto prices post rupee devaluation and higher interest rates for auto financing.