Pak Suzuki, Indus remain primary growth drivers

Auto sales during March depicted an impressive performance, rising by 80 per cent on year-on-year basis and 8.0 per cent on month-on-month basis, according to the data released by Pakistan Automotive Manufacturers Association on Monday.

Auto sales during the first nine months of FY10 registered an increase of 34 per cent on year-on-year basis to touch 97,992 units. Pak Suzuki and Indus remained the primary growth drivers during the period under review.

Indus Motor sales rise by 57 per cent on year-on-year basis in March, the companyís highest-ever sales in a single quarter. Pak Suzuki sales, which touched a 17-month high, posted a significant increase of 211 per cent on year-on-year basis amid economic slowdown and high interest rates. Analysts are of the view that Pak Suzukiís swift sales averaged 471 units per month during the first quarter of its launch.

Despite positive feedback, it seems that swift sales trend is loosing its charm due to higher price tag for a hatch-back and fuel costs, ie, available in petrol-variant vehicles. Strong performance by smaller cars, recovery in LCV sales and low base effect has lifted the volumes of Pak Suzuki by 3x during the first quarter of 2010.

Indus Motor has also benefitted from a superior model of Corolla and increase in prices by Honda Car. Honda Carís performance remained dismal, with sales depicting a fall of 31 per cent on year-on-year basis.

Cumulative auto sales during 9MFY10 registered a growth of 34 per cent on year-on-year basis with Indus Motor continue to outperform others. With the sales for the company rises by 53 per cent on year-on-year basis during the period under review, its market share increased to 36 per cent from 31 per cent earlier.

Despite an increase of 30 per cent in Pak Suzuki sales on year-on-year basis, the market share declined to 53 per cent from 55 per cent. Atif Zafar, analyst at the JS Research, said that although auto sales have posted a growth of 34 per cent on year-on-year basis during 9MFY10, it is expected that easing of monetary policy by the central bank should further stimulate sales.

However, rupee depreciation against the dollar and Japanese yen and rising steel prices remain major concerns for the auto assemblers. Another analyst Furqan Punjani attributed the recent surge in car sales to renewed consumer financing, improvement in the macroeconomic indicators and enhanced liquidity in the rural economy.

Due to gaining momentum in sales, Pak Suzuki has started to pass on the cost impact to the customers. Pak Suzuki has recently increased its prices by 5-6 per cent, improving the companyís gross margins to 3.6 per cent during the current year against 2 per cent last year.

Source The News