Slowdown signs - Pakistan car sales declined by 48pct: Steel Guru

Daily Times reported that Pakistan’s auto industry went through a sharp fall in sales during the last financial year that mirrored the deteriorating economic situation of the country.

According to figures released by Pakistan Automotive Manufacturers Association car sales during 2008 to 2009 stood at a mere 82,844 units, which was down by 48% from sale of 164,650 units in the 2007 to 2008. Cumulative auto sales posted a decline of 47% to 98,241 units from 185,964 units in 2007 to 2008.

An analyst said that the main reasons behind this decline in sale were price hike, curtailment of auto financing by most banks and reduced purchasing power of consumers. He said that banks have imposed stringent checks on auto financing due to a large number of credit defaults.

Mr Atif Zafar an analyst at JS Research said that “We believe the reason for the decline in sales is tightened car financing by banks, coupled with political uncertainty and business shutdowns in the country.”

Mr Zafar said that during this fiscal year, decline in steel prices in international market and the expected decline in interest rates would allow manufacturers to reduce prices. He said that “It is expected that elimination of 5% federal excise duty, cutback on withholding tax and a possible 200 bps reduction in discount rate will boost auto sales.” He added that the global economic recession had put negative impact on almost all sectors of economy and automobile sector was one of them.

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