Sale of cars by local assemblers in Pakistan jumped to the highest in five years in the 2014-15 financial year on demand for new model of Toyota Corolla, government-sponsored cab schemes and increase in car financing due to lowest borrowing rates, according to a latest report.
Sales of all kinds of vehicles, including vans and jeeps, rose by 31 percent in the financial year that ended June 30, compared with 1 percent in the preceding year to that and a 5.3 percent on average growth in the last five years, according to the report by Topline Securities, a Karachi-based brokerage house.
Local assemblers sold 179,953 cars in the year as against 136,888 units in the year before that.
Pak Suzuki Motors (PSMC) sold 99,879 units, a 27 percent increase year-on-year and the report attributed this growth to sale of cars under the “Taxi scheme”, sponsored by the central Punjab province to promote employment. The company is expected to sell between 30,000 to 35,000 cars under the scheme in the current financial year.
The report forecast PSMC profit to grow by 110 percent in the year on the back of increase in volume and weakening of Japanese Yen against U.S. dollars.
Indus Motors, Toyota dealers in the nation of nearly 200 million people, sold 56,943 units in FY15, showing 67 percent rise year-on-year. The rise in sale was mainly due to demand for Toyota’s new Corolla model. The company’s earnings are estimated to grow by 131 percent in the year that will end June 30.
Sales of Honda car remains stable at 23,622 units in FY15. Honda is expected to launch a new model of Honda City in 2016 and the overall car volume is expected to grow by 7 percent in the year, according to the report.
A decision by the government to maintain 10 percent General Sales Tax in the year and schemes to provide subsidy on sale of 54,000 tractors by the Punjab and Sindh province governments to help the agriculture sector will further boost the automobile sector in Pakistan.
Besides the sale of new cars, Pakistan continues to import used cars that make up around 15 percent of the country’s sales market. The import of used cars, mainly from Japan, hovers around 25,000 to 30,000 units.
Increase in car-financing has also contributed to sales with prevailing borrowing rates which are lowest in 42 years.