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Pakistan Autos Report Q4 2011
Business Monitor International, Sep 2011, Pages: 51
Business Monitor International's Pakistan Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Pakistan's automotive industry.
Some 221,174 vehicles were produced in Pakistan in FY11 (ending 30 June 2011), marking a y-o-y increase of 8.7%, while new vehicle sales were up 6.9% to 215,732 units. Growth was restricted by the earthquake and tsunami in Japan in March 2011, which caused disruptions to supply chains, in particular for the Japanese carmakers which dominate Pakistan’s automotive sector.
During FY11 133,972 passenger cars were produced in Pakistan, an increase of 10.1% y-o-y. Growth of new car sales slowed in comparison to that seen in FY10, but nevertheless, were up 3.26% y-o-y, to 127,944 units. Cars of 1,300cc and continued to dominate sales and production, while Japanese carmaker Toyota Motor’s Corolla maintained its position as the most popular passenger car in Pakistan.
Commercial vehicle production, including trucks, buses and pickups, was up 13.22% during FY11, while sales were up 1.6% ,to 21,104 units. Motorcycle production was up 13.8% y-o-y during the 2011 fiscal year, while sales were up 13.24%, to 835,455 units, during the same period.
In July 2011, research revealed that around 21% of vehicles in Pakistan could use compressed natural gas (CNG), making the country one of the highest users of the fuel in the world. Meanwhile, progression of research into environmentally friendly technology has been restricted by a lack of government funding, and as a result, Pakistan may import green technology from abroad.
Government tax revisions had a varying effect on Pakistan’s autos sector in FY11, In March 2011, local manufacturer Indus Motors announced that it would increase the costs of its vehicles, in order to overcome hikes in federal excise duty, and in June 2011, many automakers in Pakistan reported rising input costs, as a result of a shortage of metal sheets, and the declining value of the local currency.
Meanwhile , in July 2011, Pak Suzuki announced that it would reduce the cost of its vehicles by up to PKR2,100 following a 1% decrease in General Sales Tax, and the abolition of a 2.5% Special Excise Duty. A revision to the Customs Act made it unlikely that Chinese motorcycle manufacturers would follow suit.
Vehicle exports from Pakistan rose to 14,914 units in FY11, and should continue to grow steadily to around 25,285 units by the end of FY15. BMI expects imports to continue to grow, from 47,103 units in FY11, to 62,212 units in FY15. Free Trade Agreement negotiations with Sri Lanka could see Pakistan commence trade of automotive parts – while the government is keen to increase the number of components it sources locally, many assemblers have argued that the sector is currently under-developed.
BMI’s forecast for growth in Pakistan’s autos sector is restricted by the limited spending power of much of its population and the State Bank of Pakistan’s rising interest rates. As such, it is likely that we will see an increase in sales of motorcycles, particularly given Japanese two-wheeler manufacturer Yamaha’s plans to increase the annual capacity of its Bin Qasim site to 750,000 units. Vehicle production should rise to 228,043 units in FY12, while sales should increase to 222,028 units; growth should then continue at a steady rate until FY15.
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