New year, lower rates send car sales soaring

KARACHI:

Passenger car sales surged 51.5% to 58,266 units during the first seven months (Jul-Jan) of the current fiscal year compared to the same period of last year due to multiple reasons such as rising remittances, a spending spree at the beginning of new year and continuous decrease in interest rates.

According to data released by Pakistan Automotive Manufacturers Association (PAMA) on Tuesday, sales of trucks and buses ballooned 112.4% to 2,054 units and rose 54% to 365 units, respectively. Sales of jeeps and pickups went up 67.5% to 19,301 units.

Simultaneously, sales of two and three-wheelers (motorcycles and rickshaws) swelled 29.3% to 835,616 units.

When it comes to sales of farm tractors, their demand slid 26.5% to 20,158 units as both small growers and landlords were unable to purchase new tractors because of lower crop yields caused by climate change.

Talking to The Express Tribune, auto sector analyst Mashood Khan said it augured well that except for sales of tractors, the overall industry was growing in comparison with figures of the previous year.

Car sales jumped and all models of vehicles belonging to three manufacturing countries including China, Japan and South Korea were sold due to two reasons – first, people are eager to purchase new cars once the new year comes, and this year too, they resorted to a buying spree; secondly, thanks to a reduction in interest rate announced by the State Bank of Pakistan (SBP), corporate people purchased new vehicles for themselves as well as staff. This positive trend for the entire industry will be sustainable till June.

He said the federal budget for 2025-26 would determine what the government was going to announce in the automotive policy, which would play a key role in setting direction of the industry.

He said truck sales came back because the construction industry gained some momentum as new housing schemes and projects were being built throughout the country.

The government must devise a strategy that could restrict five or 10-year-old trucks from plying main cities because old trucks fall prey to road accidents and cause climate issues. This strategy will boost the truck industry and give a safe and clean environment to citizens.

When it comes to the bus industry, Khan said, instead of importing buses, the government must ask assemblers and importers to set up plants in the country to push up their sales and exports, otherwise the volume of buses would not change and people would be deprived of a good and respectable transportation system.

He pointed out that motorcycle sales had picked up and may go up to 1.5 million by the end of current fiscal year. Middle-class people travel through motorbikes as they are not able to afford cars due to the runaway inflation. They will continue to purchase bikes until the local public transportation system improves.