FY24 Auto Sales Projected to Hit 21-Year Low Despite June Surge

Karachi: Despite an expected sharp recovery in June sales for major auto assemblers like PSMC, INDU, and HCAR, FY24 total auto sales are anticipated to drop to a 21-year low. This comes amid sustained negative trends in auto financing and increasing market competition, particularly from new Chinese entrants.

According to JS Global, sales volumes for the top three auto assemblers are forecasted to roughly double this June compared to last year, primarily due to a low base effect from previous plant shutdowns. INDU, with an anticipated 44% increase in sales, is expected to offset an 8% decline in HCAR's volume. However, even with these monthly gains, the cumulative sales volumes for FY24 are expected to remain weak at 87,612 units, marking a 23% year-over-year decline. This downturn is attributed to high taxes, diminished purchasing power, and the absence of regulatory duties on imported used cars below 1300cc.

The government has made some attempts to curb the influx of used imported cars by removing concessionary duties on imported HEVs and imposing a 15% regulatory duty on cars with engine capacities between 1,300cc and 1,800cc. Nevertheless, smaller engine cars remain exempt, posing a challenge to local manufacturers like PSMC.

Moreover, the introduction of Chinese manufacturers has notably eroded the market share of established players such as HCAR and INDU. In the SUV segment, market shares for INDU and HCAR have significantly dropped to 27% and 11%, respectively, from 50% and 18% the previous year.

Auto financing has also been on a decline for 23 consecutive months, with a total reduction to Rs233 billion, down by 23% year-over-year. However, with the monetary easing cycle beginning last month and expected further rate cuts, there might be a revival in auto financing, potentially boosting sales in the near future.