Car sales in Pakistan surged by 27% month-on-month (MoM) to 13,100 units in October 2024 as lower interest rates boosted auto sales in the country.
The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) began a round of monetary easing in June 2024 by reducing the key policy rate by 150 basis points (bps) to 20.5%, which is currently standing at 15% after four consecutive cuts.
This continuous reduction in the policy rate caused an upturn in the auto sector as car sales (cars, LCVs, vans, jeeps) in the country rose by 27% MoM and a substantial 112% year-on-year (YoY) in October 2024, according to the Pakistan Automotive Manufacturers Association (PAMA) date shared on Monday.
The reduction in the interest rates also made auto financing more accessible, with financing figures rising to Rs228 billion after 27 months of stagnation.
Meanwhile, for the first four months of the fiscal year 2025 (4MFY25), total auto sales reached 40,700 units, indicating a 50% YoY increase.
Car sales surge by 24% YoY in September
Mohammad Abrar Polani, auto sector analyst at Arif Habib Limited (AHL), told media that the availability of low-markup equated monthly installment (EMI) loans from various auto assemblers further stimulated market demand.
In addition to these developments, Polani noted that more car models have entered the market and that the prices of some vehicles have been reduced amid increased competition.
“This is anticipated to further boost sales in the coming months,” he envisaged.
“However, this surge is largely due to a low base in the same period last year, when major OEMs [Original Equipment Manufacturers] like Indus Motors and Honda Cars faced extended plant shutdowns due to inventory shortages amid supply chain disruptions,” Investment Analyst at AKD Research Osama Naeem told media.
“Vehicles with an engine capacity of 800cc and below, classified as economical options, continue to experience a surge in sales due to their affordability,” he said.
In October 2024, the overall passenger car segment showed considerable growth. The 1,300cc and above category saw a 5% MoM increase, with sales reaching 3,997 units.
The 1,000cc segment recorded a marked 136% MoM rise, totaling 569 units, while sales in the below 1,000cc segment increased by 59% MoM, bringing total sales in this category to 5,991 units.
Indus Motors Company Ltd (INDU) reported a 7% MoM increase in volumetric sales, totaling 2,532 units, largely driven by a 12% MoM rise in sales of models such as the Corolla, Yaris, and Corolla Cross.
However, sales of the Fortuner and Hilux models declined by 11%.
Pak Suzuki (PSMC) saw a substantial 40% MoM increase in sales, reaching 7,040 units in October 2024. The most notable surge was seen in Cultus sales, which increased almost sixfold MoM.
Additionally, sales of the Wagon R, Alto, Bolan, and Ravi rose by 24%, 49%, 70%, and 2%, respectively, while sales of PSMC’s Swift dropped by 46%.
Auto sales increase 15% YoY in August amid mixed segment performance
Honda Atlas Cars (HCAR) experienced a 19% MoM increase, mainly driven by a 24% rise in sales of the Civic and City models. Nonetheless, sales of the HR-V and BR-V models declined by 24% MoM. Sazgar Engineering (SAZEW) recorded a 21% MoM increase in sales, reaching 1,002 units, primarily due to a rise in Haval sales.
As the market adapts to changing conditions, experts see steady growth in the auto sales, supported by favorable financing options and introduction of new models in the automotive sector.
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