Tata Motors is set to launch its low-cost Nano minicar Monday, March 23, according to media reports from India. With a starting price of about $1,945, which doesn't include dealer markup and other charges that consumers will pay, the Nano will be one of the world's cheapest cars. This product launch comes at a time when the auto industry is facing a severe downturn, attributed to the worldwide consumer credit crunch amidst a serious global financial crisis.
Like other auto makers around the world, Tata Motors is also contending with declining demand, both for its bread-and-butter commercial vehicles in India and its luxury brands, Jaguar and Land Rover. The company reported its first quarterly net loss in seven years in the October-December 2008 quarter, and saw its debt rating cut by ratings firms. More immediately, Tata Motors faces a June deadline to repay $2 billion in loans related to its Jaguar-Land Rover acquisition from Ford Motor Co. last year, according to the Wall Street Journal.
The automobile industry in India—the tenth largest in the world with an annual output of 2 million units last year—is expected to become one of the major global automotive industries in the future. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and reduced restrictions. The monthly sales of passenger cars in India exceed 100,000 units, according to a related Wikipedia entry.
In comparison with the rest of the world, the Chinese market for automobiles appears to be relatively robust. Monthly auto sales in China surpassed those in the U.S. for the first time in January, but automakers and industry watchers say the news may tell us more about the troubles in the U.S. than about China's growing car market, says a report published in San Francisco Chronicle.
Data released in February by the China Association of Automobile Manufacturers shows 735,000 new cars were sold in China last month, down 14.4 percent from the record of 860,000 set in January 2008. U.S. sales, meanwhile, fell 37 percent to 656,976 vehicles — a 26-year low.
In Pakistan, Engineering Development Board (EDB) is attempting to increase the GDP contribution of the automotive sector to 5.6%, boost car production capacity to half a million units as well as attract an investment of US$ 3 billion and reach an auto export target of US$ 650 million.
In addition to the growing defense industry, auto industry can become a driving force for the much needed manufacturing industrial base in Pakistan to create significant employment opportunities for its large population. Last year, the auto sector contributed US$ 3.6 billion, only about 2% of the GDP, to the national economy, and employed about 192,000 people.
Pakistan's auto parts manufacturing is a billion US dollars a year industry. Sixty percent of its output goes to the motor cycle industry, 22% is for cars, and the rest is consumed by trucks, buses & tractors.
After a significant growth spurt in 2002-2006, the auto sector is feeling the pain of economic slow-down in Pakistan. The industry is continuing in a slump which began in the previous financial year and according to Business Monitor International's recently published Pakistan Automotives Report, the industry’s performance this year will get worse. In FY08, which ended in June 2008, total vehicle sales fell by 6.2%. The downturn carried over into FY09, with sales for the first half of the year (July to December 2008) down by 48% year-on-year to 52,927 units for cars and light commercial vehicles (LCVs), while compared with November, sales for December were down 55%. These results support BMI’s forecast for a drop in sales of cars and LCVs to around 112,000 units in FY09. BMI expects the total auto market in Pakistan to contract by over 32%, with the worst damage done in the car and bus segments, which is forecast to fall by 45% each. Pakistan’s Economic Co-ordination Committee (ECC) is to consider a tax cut of 10% for domestic car manufacturers, which has been proposed by the Ministry of Industries and Production. However, the plan is not without its opposition, as the Federal Board of Revenue is reportedly against supporting individual sectors as this would prompt other industries to seek help. Moreover, with just five carmakers producing locally, the automotive industry is relatively small. On the other hand, the industry is also largely self-sufficient as the majority of its output is sold within Pakistan; this reduces the country’s reliance on imports and raises issues such as the protection of local jobs and the industry’s contribution to the overall economy.
Among the automakers, Indus Motors and Pakistan Suzuki reported positive earnings: The two leading car assemblers PSMC and INDUS posted positive earnings for 2008. PSMC reported operating losses of Rs 399 million. However, increase in other income by 77 percent offset their losses helping PSMC post positive earnings of Rs 26 million, according to Daily Times. Honda posted a loss after tax of Rs 190 million for the period July-December 2008 after a decline in net sales by 5 percent and a massive surge in operating expenses over the corresponding period last year.
The poor state of the industry is reflected in BMI’s Business Environment Rating for the automotive industry in Asia Pacific, where Pakistan is in last place on a score of 42.4 out of a possible 100. The market is held back by low production growth potential and an average rating for sales growth. However, as a signatory to the Trade Related Intellectual Property Rights Agreement (TRIPS) under the auspices of the World Trade Organization (WTO), the country’s regulatory environment scores well. A number of free trade agreements also contribute to this criterion, although forming FTAs with non-Asian countries would improve this rating further. Despite low marks for bureaucracy and corruption, the market does score well for its long-term economic risk and policy continuity.
With just a handful of manufacturers, Pakistan’s competitive landscape remains narrow. Japanese car manufacturers control most of the country’s passenger car production and sales. Figures for FY08 show that Suzuki-brand models represented 62% of total Pakistani passenger car production and 51.7% of sales. Toyota is gaining, however, with Corolla becoming the country’s best-selling model in the first half of FY09.
According to Daily Times, as many as 60,000 workers and staffers in Pakistan's auto sector have lost their jobs from July, 2008 to January, 2009 due to falling demand for cars. More jobs cuts are feared with continuing weakness in demand.
Given strong underlying growth dynamics in South Asia, the negative feedback effects of the global financial crisis are expected to be temporary. A relatively rapid rebound is expected in 2010, with a projected revival of GDP growth to 7.2 per cent. The long term prospects for the auto industry in the continent of Asia appear to be quite favorable. As the current financial crisis ebbs, there will be significant pent-up demand for automobiles in Asia, including India, Pakistan and China, that will drive the growth in auto industry.
Related Links:
Pakistan Automobiles Report 2009
Auto Pakistan Expo 2009
A Review of Global Road Accident Fatalities
Pakistan Automotive Report
China Surpasses US in Auto Sales
Auto Industry in India
India's Global Shopping Spree
Threre are more reasons to migrate to Canada
1 year ago
34 comments:
I would like to point out one potential impact of the Nano (if it is a success), that will do a great deal of damage if the government doesnt step in. That is its impact on the livelihoods of the autowallah's and taxi driver's across India. A typical Indian family will use the Nano not for day to day trips to the office but for the trips out to a relative or dinner. This service used to be provided by the taxis and autos, but if people have a cheap car then they will use the car instead.
The government should actually somehow subsidize the Nano for the auto/taxi drivers, so that they have a chance of remaining competitive.
Vikram,
It seems to me that the transportation needs in India will continue overwhelm the available means.
Besides, Nano factories should also create many better paying new jobs in the manufacturing sector.
My concern is mainly with the potential negative impact on the environment as both Chinese and Indians start buying a large number of cars. Already, I have seen the impact in Beijing and Shanghai where cars have replaced bicycles.
Nice Article Riaz
i wish Nano can reach out to masses of people from
developing world
Tata will be a great success for india
and it aims to sell atleast 1 million cars from 2010-2011
i wish ,pakistan allows joint ventures with tata ,and it can really help pakistan local automobile industry or vendors to grow
The way to look at the relative sizes of industrial sector in different nations is by its contribution to GDP. Here are some figures:
India 19.3%, Pakistan 26%, EU 27.3%, US 20.4%, Germany 29%, UK 25.6%, Brazil 38%,...
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composit ion
Pakistan is now using domestically and exporting CNG kits to various countries including China, Brazil and Italy. Almost 2 million vehicles on the country's roads have dual fuel options with Suzuki having the highest in quantity. According to various reports, India significantly lagging Pakistan in clean energy and CNG usage with far fewer CNG stations and smaller gas pipeline infrastructure than Pakistan.
http://www.riazhaq.com/2009/12/pakistan-leads-south-asia-in-use-of.html
Political turmoil in Pakistan, in tandem with the global economic downturn, have delivered a double
whammy to car sales and production in the country, reports BMI research.
Sales of new vehicles in Pakistan underwent a decline of 34% y-o-y in fiscal year 2008/09 (July-end
June), with total sales registered at 163,479, compared to 247,160 in fiscal year 2007/08. This was largely
in line with the forecast that we made last quarter (just under 167,000 for the fiscal year).
Although data from the Pakistan Automotive Manufacturers Association (PAMA) for July 2009 shows a
rise in sales of passenger cars and light commercial vehicles of 33% y-o-y (to a total of 9,896 units), data
for the month was reportedly distorted by a production discrepancy related to the discontinuation of a
model. Nonetheless, it appears that auto sales in the country have bottomed out, looking at data on a
month-on-month view over the last few months. Indeed, the July figures show the fifth consecutive m-om
rise in sales. Compared to June, vehicle sales rose by 9%.
More from BMI auto report:
Two key factors appear to be supporting
sales: the removal of a 5% Federal Excise Duty on cars of 850cc and above, and a reduction in prices by
Pak Suzuki on cars falling into the sub-850cc bracket. However, the supportive effect of both these
factors is temporary, and is likely to dissipate as we move later into what is still, at the moment, a very
fresh fiscal year. Moreover, economic growth remains very sluggish – the latest forecast by our Country
Risk team is that Pakistan’s economy will grow by just 2.5% in real terms in FY2009/10. More to the
point, we forecast that private consumption growth is likely to decelerate this fiscal year, to 2.5%, from a
relatively buoyant 5.2% in FY2008/09. With that in mind, we remain cautious about the trajectory of new
vehicle sales in Pakistan in FY2009/10 and currently predict a rise of 2.4% y-o-y to 167,424 units.
Production of new vehicles in FY2008/09 was down 33% y-o-y, as output of CBUs registered 165,158,
compared to 247,036 in FY2007/08. This cliff-fall figure is reflective of the performance of domestic
sales, as Pakistan’s auto production is largely geared toward serving the home market, with exports
accounting for only a small proportion of output. We would expect production in FY2009/10 to lag
domestic sales, with a fall of 6.1%, to a total annual production volume of just above 155,000 CBUs. This
is due to CBU inventories being built up during FY2008/09. Although production and domestic sales
volumes were very close in numbers last fiscal year, unsold locally produced cars accumulated, as while
exports of Pakistan-produced cars are low, while the demand for new imported models – largely to cater
for the luxury end of the market – is moderately high.
Recently, Mark Mobius of Franklin-Templeton Funds explained that for "our (Franklin Templeton's) Asia growth funds, we have been buying Pakistan Telecom, MCB Bank, and Indus Motor, which is a Toyota (TM) assembler and distributor". All three of these companies are listed on Karachi Stock Exchange.
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Here's a sad story about Tata Nano that reminds me of Ford Pinto of yester years:
Then there was smoke. And then there was fire.
Minutes after the software engineer's wife and five-year-old son clambered out of the back seat, smoke from the engine, located in the Nano's rear, erupted into flames that engulfed the tiny car.
His ordeal showed just the latest problem with the low-cost Nano - raising fresh questions about safety and quality as top Indian carmaker Tata Motors sets its sights on global expansion and aims to ramp up production of the Nano with a new factory next month.
"My wife now doesn't want to buy any car," Sawant said by phone from his home in northern Mumbai on Thursday. "She doesn't even want to go for a Mercedes."
Starting around US$2,500, the Nano has been heralded as the world's cheapest car, and was meant to usher in a safety revolution, which would get millions of families off dangerous motorbikes and into the cool comfort of an affordable car.
Tata Motors, which also owns Jaguar and Land Rover, plans to start selling versions of the Nano in Europe in 2011, and later, in America.
Tata Motors spokesman Debasis Ray said the company is investigating the incident but believes it to be a one-off problem rather than the result of faulty design or manufacture.
"We believe it was a one-off stray incident," he said. "It did catch fire. We're trying to figure out what may have caused it."
This is not the first time there have been customer complaints about the Nano, which has been feted with rave reviews and awards since its launch a year ago.
Last fall, three customers in India complained that their Nanos started smoking.
Tata Motors attributed that to a faulty electrical switch and said it had changed suppliers and done additional tests to rule out a recall or redesign.
Ray said Thursday that the incidents are not related.
The switch problem, he said, "has been comprehensively addressed."
"Safety has never been an issue with Tata cars," he added. "They are one of the safest cars on Indian roads."
But some say the Nano's smoke and fire problems are symptomatic of pervasive quality control issues at India's number three carmaker, which must be addressed before Tata can successfully take its brand global - especially in the wake of Toyota's massive recalls of more than six million vehicles around the world, which have left car buyers jittery about safety standards.
"As of today, is Tata good enough to take on the world? I would say no," said Deepesh Rathore, an auto analyst at IHS Global Insight in New Delhi. "On quality standards, Tata barely makes the cut."
There are fewer than 30,000 Nanos on the road today, which means on a percentage basis the problem rate is fairly high, he said.
"The Nano is a wonderful product, but these incidents really tarnish the image of the car as well as the company," Rathore said. "This is the time for Tata to have a deep look at quality."
He said the recent addition of Carl-Peter Forster, former head of General Motors in Europe, as group chief executive is a step in the right direction.
"They've got a guy running the show now who knows how the industry should work," he said. "How soon will the effects be seen across the Tata product range? Well, that will take time."
Meanwhile, Uruvashi Shah, manager of Ashapura Travel World, which runs a high-end taxi service, said she has gotten rid of all the Tata models in her fleet because they needed too much repair work.
She prefers Toyota.
"Corolla is quite good. There is a comfortable feel but the mechanical side is good too," she said.
Here's a Daily Times report about Pakistan exporting buses to UAE:
KARACHI: The export of buses to the United Arab Emirates (UAE) by Hinopak is starting and the first batch of 25 buses will be shipped in the current month to the Emirates Transport, UAE primarily for transportation of schools.
Hinopak Director Sales and Marketing Muhammad Irfan Shaikh said this while addressing the export ceremony of the first batch of 25 units of Hino AK8J Buses to UAE. .
Irfan said that by successfully meeting international standards in export quality, Hinopak in collaboration with its principals, is continuously striving to tap other prospective markets such as Saudi Arabia, Qatar, Oman, Kuwait, Egypt, Bahrain, UAE, Jordan and many inquiries are in the pipeline from Panama, Mozambique, Cost Rica and Sub Sahara countries. He mentioned that Hinopak has invested huge amount of money to renovate its body operation plant by keeping in view the expected orders of export from different parts of the world.
Provincial Transport Minister Akhtar Ali Jadoon said that the Sindh government is planning to operate 100 diesel buses in Karachi soon under the Benazir Transport Programme. He said that CNG bus project with 400 units would also start soon.
Trade Development Authority of Pakistan Chief Executive Mohibullah Shah appreciated Hinopak’s efforts and highlighted that for the past several years the economy of Pakistan has been undergoing a slump, marred by both international and domestic factors directly affecting the trade sector very badly.
He further added that this export segment would not only bring honour and fame, but would definitely strengthen the image of Pakistan around the world and help the country in narrowing down the trade imbalance.
Hinopak Managing Director and CEO Hideya Iijima said that these buses are especially designed considering the geographic, climatic and economical conditions of the destined country. He also said that one of the key features of Hinopak buses is the option of massive customisation in all aspects of the bus body from layouts, seating arrangements to various colour schemes.
Pakistan leads the world in the number cng vehicles and cng stations. Now, a report says that Landi Renzo Pakistan will export CNG Kits:
In Pakistan, Italian CNG kits manufacturer Landi Renzo, which commenced its assembling operations there in 2007, is planning expansion of production to enhance deliveries to growing export markets. Currently annual production exceeds 45,000 units. Corrado Storchi, External Relations Manager for Landi Renzo, confirmed the reports to NGV Global News, adding that “South-West Asia and South America are very important export countries for us”, with shipments also being made to China, Far Eastern and European countries.
Storchi confirmed that Landi Renzo has over 90 percent market share of CNG kits in Pakistan. It supplies to Indus Motors for Toyota and Daihatsu cars and Pak Suzuki Motor Company for its range of cars and vans, and other dealers and wholesalers.
Storchi also confirmed a report by The News that Landi Renzo intends to gradually increase the percentage of locally made components, currently at 20% but with the possibility of building to 100% as full quality and safety requirements are satisfied. A testing laboratory has been set up in Karachi, where all components are tested prior to assembly.
In the report, Landi Renzo Pakistan Chief Executive Officer Alberto Barbiery apparently warned that the safety and quality of the CNG kits, manufactured in Pakistan or imported, should be only installed by registered and certified dealers. Landi Renzo will soon launch an awareness campaign about safety and precautions regarding CNG kits.
Barbiery also encouraged the take-up of natural gas in the currently largely unexploited heavy duty vehicle market. “If heavy vehicles convert to CNG, the country would save precious foreign exchange being spent on diesel imports and environmental pollution would be reduced,” he said.
Excerpts from KPMG reports on Pakistan's auto sector:
Total auto sales in Pakistan in 1H-FY2010 increased by 16.37% to 61,021 units from ... The auto industry was operating at 37% of its installed capacity of 273 thousand units per annum in FY2009 and it is expected that 20% YoY growth ... units in FY2009. Market players Honda Atlas, Pak Suzuki, Indus Motors, Mitsubishi, Dewan ...
Here's a BBC report on plunging Tata Nano car sales in India:
Sales of Tata Motors' Nano, the world's cheapest car, plunged by 85% in November compared with a year earlier, the Indian carmaker has said.
It blamed the slump on the difficulty potential customers had in accessing loans to buy the car.
However, analysts pointed out that a series of fires in the Nano, as well as price rises, had also affected sales.
Tata said its total sales across all models in November were 54,622, a rise of 1% on a year earlier.
The carmaker also said that sales of its Jaguar Land Rover-branded models "continued their upward trend".
Fire hazard
However, the company said it had sold just 509 Nanos during November.
During the month, Tata offered free safety upgrades for the model, which went on sale last year.
This came after owners of the hatchback reported about half a dozen fires since April last year. There were no injuries.
The Nano was introduced to India in April 2009 and there are now about 70,000 of them on the country's roads.
The basic Nano costs about 100,000 rupees ($2,205; £1,414).
Here is an excerpt from a recent Wall Street Journal artcle on CNG:
Of the 11.4 million natural-gas vehicles currently in use world-wide, most can be found in the developing world, according the International Association for Natural Gas Vehicles, an industry body. Pakistan led with way with 2.3 million as of December 2009, while Iran, Argentina, Brazil and India together accounted for six million more. In China, the number has more than doubled since 2007 to around half a million.
There is a network of 1500 CNG stations in Pakistan to fuel the 2.3 million CNG vehicles.
Not only is Pakistan self-sufficient in building cng kits for domestic use, it is also exporting these kits.
Here's a Tribuneindia report from 2008 titled "India lags behind Pak" in gas infrastructure:
New Delhi, May 5
India is way behind Pakistan in terms of its gas pipeline network, with the neighbouring country’s network stretching around 56,400 km against its 10,500 km, connecting only 20 cities compared to Pakistan’s 1,050, industry body Assocham said.
Pakistan’s pipeline density, at present is 1044 km/mmscmd (million metric standard cubic meter per day) per day compared to 116 km/mmscmd of India, Assocham said in its paper on gas sector ‘A Comparison between India and Pakistan’.
The neighbouring country has created a 31,000 km distribution network to serve its domestic and commercial consumers in large locations, against the 11,000 km network that have so far been build in India to serve the needs of its consumers in limited pockets, the report said.
While Pakistan has nearly 1,600 CNG stations, India has 380. The gas throughput in Pakistan is 38 mmscmd per day as against 8.5 mmscmd gas in India.
The number of gas customers and vehicles running on CNG in Pakistan is about 19 lakh and 15.6 lakh respectively, while in India the number is 5.50 lakh and 4.60 lakh.
“The gas availability in Pakistan is undoubtedly quite large, compared to India but given the imports of gas and even its domestic availability in India, its pipeline network is extremely poor and the main reason attributed for the low and limited pipeline network in India is because this sector has been thoroughly regulated which has now been opened for competition,” Assocham president Venugopal Dhoot said.
The paper added that since the pipeline network in India does not reach out to most of the potential demand centres, a number of industrial projects, which would ideally run on gas, have to depend on much more costlier and more polluting alternative fuels.
As food prices and farm incomes rise, Pakistan is seeing record tractor sales in rural areas, according to The Nation newspaper:
LAHORE - Millat Tractors Limited set a new record of highest ever sales of 41,500 tractors in the calendar year 2010, improving upon its previous year sales of 37,537 tractors.
Out of these 41500 tractors, a record 5000 tractors have been produced and sold in the month of Dec, 2010.
This has been outcome of Company’s commitment to provide maximum number of tractors to increase farm productivity and accelerate the pace of farm mechanization in the country, according to a Press release.
Millat Tractors has further taken steps to increase productivity and quality of tractors in order to provide timely delivery to its customer in future.
Here's another report from Dawn on increasing rural sales of bikes:
Motorcycle and car sales enjoy over 50 per cent and 40-45 per cent market share in rural areas as country’s 60-65 per population lives in the rural areas.
After witnessing decline in August, many car and bike makers had registered recovery in sales in September.
Total car sales in July-September 2010 (including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009.
In the category of 1,300cc and above, Honda Civic and City sales in September 2010 rose to 548 and 832 units as compared to
492 and 688 units in August 2010. However, sale of these cars had plunged in August 2010 as compared to July 2010.
In July-September 2010, sales of Civic and City had risen to 1,558 and 2,274 units from 1,308 and 1,955 units in the same period of 2009.
Toyota Corolla sales slightly went up to 3,070 units in September 2010 as compared to 2,901 units in August 2010 while its July 2010 sales were 4,400 units.Overall Toyota sales in July-September 2010 increased to 10,371 units as compared to 8,951 units. Suzuki Swift sales rose to 252 units in September 2010 as compared to 226 units in August 2010.
In 1,000cc segment, a total of 1,106 units of Suzuki Cultus were sold in September 2010 as compared to 1,050 units in August 2010 while Alto sales slightly fell to 1,047 in September 2010 from 1,141 units in August 2010. The overall sales of Cultus and Alto in July-September swelled to 2,860 and 2,819 units from 2,852 and 2,365 units in the corresponding period of 2009...
Here's a BMI report on Pakistan's auto sector in 2010-2011:
Final data for 2010 (calendar year) passenger car sales within Pakistan show that a total of 134,757 passenger car units were sold from January-December 2010 period, and passenger car production was 130,625 in total for the calendar year.
Looking at trends at the halfway stage of FY10/11 (July to end June), total vehicle production was 106,810 units, an increase of 9.2% y-o-y on the 97,788 units produced over the same period in FY09/10. This is made up of 62,952 units passenger car production, 1,432 units truck production, 242 units bus production, 504 units jeep production, 8,961 units pick-up production and 32,719 units farm tractor production.
Total vehicle sales for H1FY09/10 were 102,469 units, an increase of 6.2% y-o-y on the 96,440 vehicles sold over the first half of FY09/10. This is made up of 59,646 passenger cars sold, 1,384 trucks, 243 buses, 381 jeeps, 8,072 pick-ups and 32,743 farm tractors.
All of which bodes well for the evolution of Pakistan’s auto sector over the current fiscal year. Our current forecasts are for total FY10/11 production to reach 221,583 units, with sales to reach 224,160 units. Considering the strong start to this fiscal year, there could be some upside risk to these forecasts. However, with car prices continuing to rise and continuing weak economic backdrop in the country, we refrain from making any changes to our forecasts this quarter. Moreover, a recent extension of the age of imported new cars allowed into Pakistan could also hit new car sales (see Page 6 for further information). Considering this mixed outlook for new car sales therefore, we shall await further data from the third quarter of FY10/11 before deciding if any further changes need to be made to our forecasts.
Certainly, the start of FY10/11 saw new car sales fall by 31.6% month on month (m-o-m), to 9,796 units in July, as customers felt the impact of an increase in General Sales Tax (GST) and with heavy flooding causing displacement of people and severe disruption to business across the country. However, this poor monthly performance did not mark the start of a negative trend, with the remaining five months of the calendar year all showing positive growth.
This upwards sales trend came as a surprise to most industry analysts, who had expected a combination of a weak rupee and falling income and demand from flood-affected areas to have sent car sales lower. It may be, however, that with the Pakistan rupee and consumer demand both set to remain weak into 2011, customers chose to buy new cars early in the current fiscal year, for fear that they will continue to increase in price over the coming months. Certainly, local media have speculated that this is what car dealerships have been doing, buying cars in at current prices to hedge against future likely price rises. Increase in imported used cars to meet demand
In January 2011 the Pakistan cabinet passed legislation extending the age limit on imported used cars from three years to five years as it tries to open up car ownership to poorer Pakistanis. The move follows the release of a report by the country’s Economic Coordination Committee which stated that the current import regime of about 30,000-40,000 cars a year was proving insufficient to meet growing demand for private vehicles.
Pak Suzuki Motors (PSMC) to gain from Punjab govt's yellow cab scheme, according to The News:
KARACHI: Pak Suzuki Motor Company (PSMC) stands to gain from the Yellow Cab Scheme announced by the government of Punjab in its budget for 2011/12, analysts said.
The provincial government has announced that a grant of Rs4.50 billion has been allocated for the scheme, which will partly finance 20,000 vehicles.
Contrary to the yellow cab scheme, the Nawaz Sharif government introduced in 1992/93, this scheme relies on locally-made vehicles.
‘Mehran’ and ‘Bolan’, the two most popular makes of Pak Suzuki, have been short-listed for the scheme.
The analysts said the ultimate beneficiary will be the PSMC, which has been suffering from appreciating yen, relaxation in import policy and production constraints since a tsunami-hit Japan.
Gross profit margin of the company has squeezed to mere two percent in 2010, which was around four percent a year back, they added.
Details of the scheme are yet to be unveiled, but it is expected that the vehicles would be 50 percent financed by the government of Punjab, while the buyer would have to pay the rest.
There are concerns of possible lack of transparency in financing.
Besides, there is a lack of clarity about the time period over which the scheme would be spread.
Furqan Punjani, an analyst at the Topline Research, said that there are possibilities that out of 20,000 only 12,000 to 15,000 units will go in the said scheme and the rest might fall victim to corruption.
An analyst at Arif Habib Research said that it is believed that PSMC’s car volumes would spike by nine percent and 16 percent in CY11E and CY12F.
Consequently, the earning pershare (EPS) of the company would improve by 75 percent and 116 percent in CY11E and CY12F, respectively, he said.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=53955&Cat=3&dt=6/23/2011
India's transport system is the most dangerous in the world costing hundreds of thousands of innocent lives each year, but it's hunger that takes the biggest toll with over 7000 dying of hunger every day.
Here's a story from the Guardian titled "Indian roads officially the most dangerous in the world":
It is an unenviable statistic but India's chaotic roads are now officially the most dangerous place to drive in the world.
Last year road accidents claimed more than 130,000 lives – overtaking China, which has seen fatalities drop to fewer than 90,000, and prompting a government review into traffic safety that until now has been best summed up by local drivers as "good horns, good brakes, good luck".
Ministers are considering a range of new measures, such as making airbags and anti-braking system mandatory in all cars. Trucks may also be fitted with speed breakers in a bid to bring down fatalities.
However, many experts say that new laws will have little effect in India, where seat belts are rarely worn and where no one can anticipate with any certainty the behaviour of the average road user.
Nor can most road users guess what type of vehicle they will face – Delhi alone has 48 different "modes of transport" including cows, elephants and camels as well as cycle-rickshaws and SUVs.
Rohit Baluja of Delhi's Institute of Road Traffic Education says "the real issue is not car design but road design. About 85% of all deaths on the roads are pedestrians and cyclists not drivers. We do not design traffic management systems to separate different streams of traffic. In America this began in 1932".
http://www.guardian.co.uk/world/2008/oct/10/india
Pakistani car sales rose 61% in July, according to The Nation:
LAHORE - The new fiscal year has kicked-off on a positive note for the car manufacturers. As per the latest data released by Pakistan Automotive Manufacturers Association (PAMA), country’s auto sales surged by a significant 61 per cent to 17,563 units in July 2011 against 10,942 units in the same period of last year. On monthly basis, the volumetric sales improved by 134 per cent compared to 7,517 units sold in June 2011.
This significant improvement is primarily attributable to deferred sales from June to July as buyers opted to take advantage of 2-3 percent cut in prices on account of reduction in sales tax by 1 percent and other measures announced in Federal Budget FY12
Company wise breakup shows that, PSMC led the increase with 116 percent rise to 11,997 units compared to mere 4,503 seen in same period last year, while sales for INDU declined by 9 percent to 4,551 units compared to 4,999 units in July 2010.
An auto expert Furqan Punjani observes that July sales are not an actual depiction of the sector’s fundamental and they are expected to ease down going forward. Furthermore, amid absence of aggressive consumer financing due to higher markup rates and nominal growth in agriculture economy the volumetric sales for FY12 will only show an improvement of 5-10 percent.
Despite improved volumetric sales, he maintained ‘Market-weight’ stance on the sector on account of strained margins amid continuous appreciation of Japanese yen and high regulatory risk.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/12-Aug-2011/Car-sales-jump-by-61pc-to-17563-units-in-July
Car sales in Pakistan rose 61% and fell by 16% in India in July 2011.
Car sales in India, the world's second-fastest growing major auto market after China, fell 16 percent in July, their first drop in two-and-half years, after rising a breakneck 30 percent in 2010, according to Reuters:
NEW DELHI, Aug 12 (Reuters) - India's largest carmaker Maruti Suzuki expects to post single-digit sales growth this fiscal year, a far cry from its 25-percent rise last year, as rising interest rates and prices in Asia's third largest economy force consumers to tighten their purse strings.
Car sales in India, the world's second-fastest growing major auto market after China, fell 16 percent in July, their first drop in two-and-half years, after rising a breakneck 30 percent in 2010.
The Indian car market is now expected to grow by just 10 to 12 percent this fiscal year, down from an earlier forecast of 16 to 18 percent, the Society of Indian Automobile Manufacturers said last month.
"If you ask me, we will not reach a double-digit," Chairman R.C. Bhargava told reporters, referring to both Maruti and the India car sector.
Maruti, which sells nearly half of all passenger cars in India, posted a record 25-percent slump in July sales.
The company, 54.2 percent owned by Japan's Suzuki Motor , has cut production of most models in August, including its best-selling model Alto, as inventories were rising and there was no place to store cars, marketing and sales chief Mayank Pareek said.
Maruti is facing intensifying competition from the likes of South Korea's Hyundai Motors , the second-largest car maker in India, as well as domestic rivals.
SECTOR TO REV UP
Bhargava said he expected the Indian car market to pick up speed in two to three months as the festive season kicks in.
The Indian festive season peaks in November, during the Hindu festival of Diwali, when it is considered auspicious to buy big-ticket items and when most employees get their annual bonuses. But sales are also driven by discounts at that time of year.
India's population of 1.2 billion and the common sight of families of four riding motorcylces creates potential for massive demand, but the pressure is sure to remain in an industry spurred by a burgeoning and aspirational middle class that relies mainly on loans to buy cars.
India's central bank has raised interest rates 11 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt car purchases, most of which are financed through loans.
Still, Bharghava was optimistic. "Fundamentals here are very strong. There is still a huge domestic potential demand," he said.
http://www.reuters.com/article/2011/08/12/maruti-india-idUSL3E7JC2FR20110812
Here's a news report on India's slowing car sales:
Passenger car sales in India grew at a scorching 30% in 2010-11 (April-March). But with rising interest rates on auto loans and a sharp rise in petrol prices, car sales this year have slowed down to a crawl.
In fact passenger car sales crashed 16% in July and 10% in August, according to data by Society of Indian Auto Manufacturers (SIAM). Strike at Maruti Suzuki’s plant in Manesar, which had hit output of one of its most selling cars, the Swift hatchback, has only added to the pressure on overall industry sales.
SIAM has already cut its growth forecast for car sales to 10-12% from earlier 16-18%. Last month it said it would further downgrade growth forecast for the full year.
Research firm Crisil painted a bleak picture earlier in the week, saying it expects "growth in passenger vehicles to decelerate sharply to 2-4% with domestic cars growing at a mere 0-3% as against earlier forecast of a growth of 8-10%."
Crisil said its latest downgrade was prompted by Rs 3 rise in petrol price and 25 basis points hike in interest rates by Reserve Bank of India in September.
Other analysts, like Nikhil Deshpande of Pinc Research and Sejal Jhunjhunwala of Way2Wealth Securities too agree that sentiments are not looking good this year, despite the ongoing festive season.
"Automakers had expected car sales to pickup in the festive season. But there were two conditions -- interest rate hike cycle would peak out and fuel prices wouldn’t rise. But there has been no respite on either front," Deshpande told moneycontrol.com
No wonder then the automakers are going all out to tempt customers now, with more offers this year than last year, in the hope that people will spend impulsively during Dassera-Diwali. Fiat India, for instance, is offering benefits up to Rs 1.30 lakh on its Linea sedan, and Rs 75,000 on the Punto hatchback. Fiat’s offer includes insurance at Rs 1, exchange benefits, gift cheque and free road side assistance for 50 months.
http://www.moneycontrol.com/news/business/discounts-galore-as-passenger-car-sales-hit-speed-bumps_592863.html
Here's a Dawn report on Pakistan auto sales July-Sept 2011:
KARACHI: While sale of cars, two and three wheelers and light commercial vehicles remained brisk from July-September 2011, production by a leading tractor assembler remained suspended between second week of July 2011 and September 2011.
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Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.
Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.
Pak-Suzuki Motor Company Limited (PSMCL) raised the prices by Rs14,000-30,000 followed by two to four per cent by Indus Motor Company (IMC).
Honda City also became costlier by Rs25,000 while Civic price was raised by Rs38,000.
Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.
Overall sale of costly cars (1,300cc and above) rose to 16,936 units as compared to 14,949 units.
Sale of Honda Civic, Honda City and Toyota Corolla stood higher at 1,710, 2,562 and 10,682 units as compared to 1,558, 2,274 and 10,371 units respectively. Suzuki Swift sales also surged to 1,826 units from 673 units.
In 1,000cc segment, overall car sales jumped to 7,343 in July-September 2011 from 5,679 units in the same period of last year in which sales of Suzuki Cultus and Suzuki Alto swelled to 3,710 and 3,633 units from 2,860 and 2,819 units respectively.
Increase in Suzuki Mehran sales to 8,415 units from 5,356 units made a positive impact on overall sales of 800cc and below 1,000cc cars which rose to 13,786 units from 9,402 units.
Sale of Daihatsu Cuore and Suzuki Mehran went up to 1,282 and 4,089 units as compared to 1,136 and 2,910 units.
A leading car assembler said he checked with many banks who intend to cut interest rates from Nov 1 after Central Bank`s decision to lower interest rates.
He said car financing by banks now enjoys 20 per cent share in overall car sales and this share may go up slightly after cut in interest rates.
From July onwards, the buyers especially on cash basis had resumed purchases and it was evident from sales trend in the first quarter of the current fiscal year.
Rising farm income also encouraged farmers and growers to purchase more new bikes, thus pushing up Honda bikes sales to 152,605 units in July-September 2011 from 126,701 units in the corresponding period of 2010.
Sale of Suzuki bikes also increased to 5,506 from 4,588 units while sale of Ravi and Habib bikes (Chinese two-wheelers) improved to 6,680 and 7,707 units from 5,971 and 4,053 units.
Qingqi and Sazgar three-wheeler sales reached 5,193 and 3,901 units from 2,787 and 2,976 units.
In pick-ups, a total of 4,586 units of Suzuki Ravi and 856 units of Toyota Hilux were sold in July-September 2011 as compared to 3,129 of Ravi and 285 units of Hilux in the same months during 2010.
In heavy vehicles, sales of only Master trucks rose to 110 units from 82 units while sales of Hino, Nissan and Isuzu trucks plunged to 231, 33 and 36 units from 422, 102 and 119 units.
In buses, Hino bus sales dropped to 56 units from 110 units and Isuzu bus sales also came down to 12 units from 23 units........
http://www.dawn.com/2011/10/11/tractor-heavy-vehicles-sale-dip.html
SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.
Rising prices are usually something auto makers welcome. Not in India.
As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.
But thanks to rising interest rates, buyers are hitting the brakes.
Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...
http://online.wsj.com/article/SB10001424052970203499704576624454021313240.html
Here's more from Reuters:
NEW DELHI, Oct 10 (Reuters) - Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia's third-largest economy.
The growth forecast is down from the earlier estimate of 10 to 12 percent by the Society of Indian Automobile Manufacturers (SIAM), and 16 to 18 percent before that. Car sales had jumped 30 percent in the fiscal year 2010/11 that ended March.
"If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued," S Sandilya, President, SIAM and Chairman, Eicher Motors , told reporters.
Indian car sales last grew in single digits in 2008/09, at 1.39 percent.
Demand for cars in the world's second-fastest growing auto market after China has also been dented in recent months by rising vehicle costs, with many first-time buyers plumbing for motorcycles or scooters.
Car sales fell 1.8 percent in September to 165,925 cars, data released by SIAM showed on Monday. Demand for cars shrunk in July for the first time in nearly three years.
However, sales of commercial vehicles, a key pointer to the country's economic activity, rose 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 vehicles.
India's central bank has raised interest rates 12 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt credit-based purchases and slowed economic growth.
The Indian car market, which saw a 10 percent decline in August, is driven by a burgeoning and aspirational middle class that mostly relies on bank loans for purchases.
Maruti Suzuki , India's largest car maker, and 54.2 percent owned by Japan's Suzuki Motor Corp , posted a 21 percent drop in September sales, but rival Tata Motors , which makes both commercial vehicles and cars, reported a 22 percent increase for the month.
"The way things have been going in the last few months, this is a realistic number. While there is some uptick in festive demand, it's nowhere close to what it was in the last two years," said Vineet Hetamasaria, auto analyst at Mumbai's PINC Research.
SIAM raised its growth forecast for commercial vehicles to 13 to 15 percent, from the earlier forecast of 12 to 14 percent.
"Demand for movement of goods still remains, because the economy is still growing at 7 to 8 percent," SIAM's Sandilya said.
http://www.reuters.com/article/2011/10/10/india-autos-forecast-idUSL3E7LA1J320111010
Some commentators have bragged about passenger car ownership figures in India vs Pakistan. The latest available World Bank data (2006-7 shows that they are pretty close: 9 per 1000 in Pakistan vs 10 per 1000 in India.
http://data.worldbank.org/indicator/IS.VEH.PCAR.P3
I believe it does include dangerous contraptions like jugaads often seen plying on Indian roads.
Here's a report in The Nation newspaper on Pakistan's auto parts industry:
The auto sector has taken initiative to organize the show for local auto part vendors to look for more export opportunities. Praising the efforts of local vendors in developing the engineering base and enhancing the skill sets of local engineers, they said that it is for the efforts of OEMs that local auto manufacturers have achieved 60 percent localization.
The auto sector is fully committed to localization process and has already developed 60 vendors and has arranged 34 technical assistance agreements for transfer of technology. In this regard, the IMC has invested Rs13 billion in development of internal infrastructure which includes Press Shop, Engine Shop and Paint Shop.
The OEMs have invested over Rs75 billion in local auto industry and it contributes more than 5 percent annually towards the national exchequer. Moreover OEMs and auto parts manufacturers employ around 200,000 people and supports employment of over 1,392,000 persons throughout its supply chain of vendors, suppliers and dealers.
The auto industry experts expressed confidence that the show will attract local and foreign investors and that the local auto industry will get support from government and policy makers which will help open doors for exploring foreign markets.
The local car manufacturers including the Indus Motors Company are the platinum sponsor for Pakistan Auto Parts Show (PAPS 2011) aimed to provide a platform for local engineering firms to introduce their products.
The auto sector in Pakistan is committed to play its role in the development of engineering base of the country. So, sponsoring ‘PAPS 2011’ is a step in this direction, which will showcase the achievements of Pakistan auto industry.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/24-Oct-2011/Pakistan-Auto-Parts-Show-opens-today
Here are some excerpts from a Bloomberg report on increasing auto sales and profits at Indus Motors in Pakistan:
Car sales in Pakistan increased 26 percent to 38,065 units in the quarter ended Sept. 30 from a year earlier, the Pakistan Automotive Manufacturers Association said Oct. 10. Indus sold 12,820 cars in the period, rising from 11,792 a year earlier, according to the association.
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Oct. 25 (Bloomberg) -- Indus Motor Co., Toyota Motor Corp.’s affiliate in Pakistan, posted a 62 percent gain in first-quarter profit as rising incomes boosted sales.
Net income climbed to 937.5 million rupees ($11 million), or 11.93 rupees a share, in the three months ended Sept. 30, from 577 million rupees, or 7.35 rupees, a year earlier, the Karachi-based company said in a filing today. Sales gained 20 percent to 17.1 billion rupees.
Sales of the Cuore, Corolla, and Hilux models assembled by Indus increased more than 9 percent during the three months, according to Shahbaz Ashraf, an analyst at Arif Habib Ltd. Remittances to Pakistan gained 25 percent to $3.3 billion in the period, the nation’s central bank said Oct. 10.
“Rising remittances and farm incomes helped pushed sales for the company,” Ashraf, who has a “buy” recommendation on the stock, said by telephone from Karachi before the company’s announcement.
Indus, Pakistan’s second-largest carmaker, didn’t provide reasons for the profit increase in its filing.
Shares of Indus climbed 2.5 percent to 199 rupees as of 1:24 p.m. on the Karachi Stock Exchange, paring the stock’s decline this year to 21 percent.
Higher crop prices boosted farmers’ incomes in Pakistan by 342 billion rupees in the 12 months through June 30, more than the annual gain of 329 billion rupees in the preceding eight years, according to an economic survey published by the Ministry of Finance.
http://www.businessweek.com/news/2011-10-25/pakistan-s-indus-posts-62-profit-gain-as-sales-rise.html
Here's a report on Pakistan starting to export rickshaws:
Lahore: After exporting the motorcycles now Pakistan is ready to export CNG rickshaws to eight countries.
Chief executive, Sazgar engineering company, Mian Asad Hameed said that in the phase they were exporting around 150 rickshaws to eight countries and will increase the numbers gradually.
“We have delivered 22 rickshaws to Nigeria whereas we have received order for 40 rickshaw from Egypt,” he added.
He further said, “we are reviewing the possibility of export the vehicle to Srilanka and Indonesia.”
It is to be mentioned here that due to the prolonged outbreaks in Pakistan, industry faces severe crisis but this step would have positive impact on exports.
http://www.thenewstribe.com/2011/10/15/pakistan-all-set-export-rickshaws-to-8-countries/#.TqbmdtSXOSo
Here's a Pakistan Today report on motorcycle manufacturing in Pakistan:
Karachi - To effectively cope with domestic market of over 1.5 million units and after successful launch of their products in global markets, the local motorcycle producers are now planning a further investment of $100-150 million in their existing units.
The motorcycle industry analysts have pointed out that despite numerous hiccups faced by the economy in recent years, growth in motorcycle production has been robust at 15 per cent. “A decade back, the total motorcycle production in Pakistan was around 100,000 units, now the largest player alone is rolling out half a million units while total production of two wheelers has crossed 1.5 million. They said that the encouraging aspect in this regard is that industry is on the path to sustained growth. The local demand for motorcycles is likely to exceed 2 million units within a year or two,” they added.
“The global response to our quality motorcycles indicate a sustained and healthy growth in exports as well” they opined, adding that in fact, the industry experts are seeing themselves as the largest exporters in the engineering sector. A sustained growth is only possible due to regular investment and up-gradation of technology in the motorcycle industry. “The growth we see in motorcycle production would not have been possible without investment”, they added.
In this regard, Fahad Iqbal CEO, HKF Engineering, makers of Ravi motorcycles said that the industry now has to fulfill the growing demand in both domestic and global markets and for this, it needs to invest over $100 million in the next couple of years to keep abreast with market needs and demands. He said that all the motorbike producers having production of 50,000 units or above are now planning to expand their capacities to cope up with the market demands.
“There are almost a dozen players that have achieved this production level” he said, adding that even if each of them invests $10-15 million, the total investment would cross $150 million. These units have been regularly making investments to increase their market share but now they have reached a level where they have to invest in high-tech parts to ensure that instead of having 90 per cent local components, Pakistani bikes are produced by 100 per cent local parts, he added.
Market analysts urged that in such an encouraging situation, the government should refrain from taking steps that might jeopardise this investment. He said that an investment of $150 million by local players without any government concession is better than vying for similar investment over a period of 10 years from a foreign company. The current players, from Italy, China and Japan, are also in various stages of developing new models in the 100-150 cc range with the latest technology, he said. However, he added, they were not offered any relief even on imports of the environmentally friendly Euro 2 components, which have already been introduced in local bike production.
“Capacities exist in the country in areas like sheet metal parts and there is a huge investment need in areas such as die casting for parts like crank cases and crank covers, electronic parts such as CDI units, engine parts like ACG, clutch, pistons, shock absorbers (cushions), plastic parts such as emblems” said Arshad Awan CEO General Engineering and added that even capacity enhancement and thus investment will be needed in low-tech parts like head lights, tail lights etc.
http://www.pakistantoday.com.pk/2011/08/bike-manufacturers-plan-heavy-investment/
Indian auto sales continue to drop by double digits, according to India Today:
October's festive cheer failed to revive car sales during the month as higher interest rates and rising fuel prices kept potential buyers away.
Leading car maker Maruti Suzuki India Ltd (MSIL), reeling under the workers strike, was the hardest hit with sales falling to less than half of last year's level for the month.
The firm's domestic sales dipped by 52.16 per cent at 51,458 units in October 2011, from 107,555 units sold in October, 2010.
MSIL's small car sales (M800, A-Star, Alto and WagonR) fell by 54.86 per cent to 25,009 units against 55,404 units in October, 2010. The compact segment (Estilo, Swift and Ritz), posted a 56.09 per cent dip in sales to 10,859 units.
Sales of DZiRE decreased by 48.14 per cent to 5,001 units and SX4 fell by 83.81 per cent to just 320 units. MSIL sold only three units of its luxury sedan Kizashi.
India's number two car maker Hyundai Motor India Ltd (HMIL) reported a 4.95 per cent drop in sales to 33,001 units from 34,720 units in October last year.
"We have seen that sales get a boost in the festival season, but this year, sentiment has been tepid. We don't expect a major upswing in the near future, the challenging economic environment is affecting industry," Arvind saxena, director (marketing and sales), HMIL, said.
In the A2 segment (Eon, Santro, i10 and i20), the company sold 41,204 units, while in the A3 segment (Accent and Verna), sales stood at 6,929 units. While the new Santa Fe SUV attracted 190 buyers its small car Eon has received more than 9,000 bookings till date.
Tata Motors saw a marginal 2.64 per cent increase in its passenger vehicles sales in the domestic market at 25,124 units in October, from 24,478 units sold in October 2010. While the Indica family sales stood at 10,812 units, up 11 per cent, the Indigo family recorded drop in sales by 24 per cent at 6,268 units. Sales of Sumo, Safari and Aria grew by 23 per cent to 4,176 units and Nano sales recorded 26 per cent increase at 3,868 units....
Read more at: http://indiatoday.intoday.in/story/october-car-sales-dip-costly-fuel-higher-interest-rates/1/158264.html
Pakistan auto sales up 24% in October, reports Daily Times:
KARACHI: Pakistan Automotive Manufacturers Association (PAMA) has released local automobile industry’s sales and production numbers for the month of October 2011. As per data, auto sales of the industry witnessed a substantial growth of 24 percent year to year (YoY) to 58,576 units in four months of fiscal year 2012 (FY12) as against the sales of 47,143 units in the corresponding period last year.
The main reason behind this substantial volumetric growth seems to be incentive given by the government to local auto manufacturers in terms of removal of Special Excise Duty (SED) of 2.5 percent on imported and manufactured vehicles coupled with reduction in General Sales Tax (GST) from 17 percent to 16 percent in addition to the low base effect. Pak Suzuki Motor Company Limited (PSMC) witnessed a 38 percent YoY growth to 34,877 units in 4M FY12 as against the sales of 25,279 units in same period last year.
Highest growth was observed in the sales of Suzuki Swift of 140 percent YoY to 2,328 units as against 969 units in the same period last year.
Liana under the domain of 1300cc and above segment also witnessed a handsome 37 percent YoY jump in its sales to 168 units in comparison of 123 units in the same period last year.
Ravi, the pickup, experienced a massive 23 percent growth to 5,722 units versus 4,665 units same period last year. Indus Motor Company Limited (INDU) witnessed a 7 percent YoY growth in sales to 17,806 units in 4M FY12 as against 16,622 units in same period last year. Hilux, under pickup segment led the growth in sales of the company with a gigantic 135 percent YoY to 1,099 units as against 647 units in the same period last year.
Toyota Corolla posted upsurge in sales by 6 percent YoY to 15,175 units as against 14,622 units in the same period last year. Cuore remained as the only segment of the company, whose sales experienced a decline of 19 percent YoY to 1,532 as against sales of 1,893 units in the same period last year. Honda Atlas Cars Pakistan Limited (HCAR) also showed a handsome growth in its sales of 14 percent YoY to 5,893 units in 4M FY12 as against the sales of 5,172 units in 4M FY11.
The main reason behind growth was low base effect. The City, the most liked segment of consumers post 20 percent YoY growth to 3,647 units as against sales 3,041 units in same period last year.
Civic another product of the company in 1300CC and above segment posted a modest rise of 5 percent YoY to 2,246 units in comparison of 2,131 in corresponding period of last year.
As far as the market share is concerned, PSMC leads the market with 60 percent market share followed by IMC and HCAR with 30 percent and 10 percent market share in 4M FY12.
http://www.dailytimes.com.pk/default.asp?page=2011\11\15\story_15-11-2011_pg5_2
India car prices rising as Indian rupee hits record lows, reports Wall Street Journal:
NEW DELHI – Several auto makers in India have decided to increase their vehicle prices in January due to rising raw material costs and a fall in the local currency’s value, which has made imports of parts more expensive.
The local units of Hyundai Motor Co., General Motors Co., Ford Motor Co. and Toyota Motor Corp. will increase vehicle prices on Jan. 1. Suzuki Motor Corp’s unit already increased prices of its diesel models last month.
The Indian rupee is the worst-performing Asian currency this year, with the U.S. dollar rising nearly 16% against the local unit. Auto makers, especially the local units of foreign companies, import large amounts of parts and the rupee’s weakness has driven up their costs.
They have also been hit by higher prices of key raw materials such as steel and aluminum.
Raising vehicle prices could further damp demand for vehicles, which has remained weak since June due to rising fuel costs and higher interest rates on loans.
Hyundai Motor India Ltd.’s director of sales and marketing, Arvind Saxena, said factors such as inflation and the rupee’s depreciation have “compelled us to look at a price increase.”
The company will increase the prices of all its vehicles by 1.5%-2.0%.
Maruti Suzuki India Ltd. raised prices of the diesel variants of four models by up to 10,000 rupees ($195), and it will consider a similar increase for gasoline-powered vehicles after December as an appreciation in the Japanese yen has made parts imports expensive, India’s largest car maker said on Dec. 1.
The company expects its operating profit margin to shrink 1.0 percentage point during October-March due to the currency effect.
Ford India will raise prices of all vehicles by up to 3%, while General Motors India will increase prices of most models by 1%-2%.
P. Balendran, vice president for corporate affairs at GM India, said it will increase the price of the diesel variant of its Beat small car by 15,000 rupees as it is currently being sold at introductory rates.
Toyota Kirloskar Motor Pvt. Ltd. also said it will lift prices by up to 3%.
Honda Siel Cars India Ltd., however, said it isn’t considering raising prices right now. “Our immediate priority is to make sufficient cars to meet demand,” said Jnaneswar Sen, senior vice president of marketing and sales.
The company has been forced to cut production due to a shortage of parts from Thailand following heavy floods there.
A Tata Motors Ltd. spokesman refused to comment, while executives at Mahindra & Mahindra Ltd. couldn’t be contacted.
http://blogs.wsj.com/drivers-seat/2011/12/07/car-prices-to-rise-in-india/
Excerpts from The News on Pakistan auto makers' contribution to economy:
The local auto industry manufacturers and vendors had paid total revenue of Rs64 billion last year while the industry saved foreign exchange of $500 million during the same period, said a presentation of the Indus Motor Company (IMC) to visiting journalists on Saturday.
With total investments of Rs92 billion and 0.4 million job opportunities, the local auto manufacturing industry has contributed substantially in the growth of national economy.
Despite some challenges and regulatory issues, the local auto industry has been flourishing and it is one of the important contributors in the country’s gross domestic product (GDP) growth, it added.
However, the local auto industry is a victim of government’s anti-industry policies like the import of used cars which are not only hurting the industry but also depriving the government of huge revenues in terms of duties.
Besides, the local auto manufacturers are fighting with the misperception that they charge exorbitant prices for vehicles while the quality is also not good. Yet, most of the facts once known would easily make the public to change perception about the industry.
The prices of cars have been increased by only 14 percent in last 2 years whereas the price of steel has increased by 16.5 percent, aluminum by 50.5 percent and polypropylene by 127 percent, minimum wage has increased by 75 percent, electricity and gas increased by 51 percent and 43.6 percent respectively during the same period.
Besides this, the depreciation of Pakistani rupee also played its role in increasing pressure on the industry, like the US dollar increased by 20 percent, Japanese Yen by 66 percent and Thai Bhatt by 22 percent.
Moreover, the duties on completely knocked down units (CKD) in Pakistan are much higher than other regional countries which contribute to high car prices. CKD duty in the country ranges between 32 to 50 percent, while in Thailand it is 30 percent and in India it ranges between 10 to 30 percent.
One of the major players of local auto manufacturing industry, IMC, while nullifying the stereotype image of the industry, has contribution of 1.5 percent/year to the national economy growth and maintained its image of quality production with plausible prices.
In addition, it has increased its production capacity from 20 units per day in 1993 to 210 units per day in 2011.
The company also created huge job opportunities as its number of direct employees increased from 496 in 1993 to 2,180 in 2011.
While commenting on IMC’s performance, CEO IMC, Parvez Ghias said that the buyer’s trust on the quality of the company’s products can be gauged by the fact that the company’s unit sales increased from 11,000 in 1993 to 51,000 in 2011.
Similarly, its units’ production increased from 2,930 in 1993 to 50,759 in 2011.
He said that IMC has been contributing heavily to the localization.
It is pertinent to note here that a total of 582 Corolla parts and assemblies are produced locally, while the company’s vendor-base has increased from 21 in 1993 to 60 in 2011 and these vendors are employing over 0.2 million people.
He said that on the part of dealership, the company’s 3S dealership increased from 21 in 1993 to 24 in 2002 and 34 in 2011 and of the total 34 3S dealership, 8 are in north region, 16 in central region and 10 in south region.
The company’s 3S dealership will increase to 66 till 2016.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=88793&Cat=3
Pakistan car sales up 20.5% July-Dec 2011, reports Dawn:
Car sales in the first half of current fiscal year went up by 20.5 per cent amid negative developments including the government’s decision to impose a ban on CNG kits and cylinders, suspension in production of Honda Civic and City and increase in prices of all vehicles.
According to figures shared by the Pakistan Automotive Manufacturers (PAMA), consumers purchased 12,240 more cars in July-December 2011 to 71,886 units as compared to 59,646 units in the same period of 2010.
Increase in production of Suzuki Mehran and Suzuki Bolan for onward supply to Punjab government’s Yellow Cab Scheme was the main reason that averted the negative impact of ban on CNG kits and cylinders and production halt of Honda cars on the overall production figures.
However, local assemblers are still perturbed over the government’s decision of imposing ban on CNG kits and cylinders. In this regard, Pak Suzuki Motor Company Limited (PSMCL), which holds over 50 per cent market share, may suffer more as it used to roll out 80 per cent CNG fitted vehicles out of its total production. Assemblers added that six months sales had risen due to previous orders and the impact of government’s decision would be visible in coming months. It must be noted that Toyota Corolla, which also launched CNG fitted vehicles few months ago, might also be affected by this decision.
Sarfaraz Abbasi, an analyst at Summit Capital, linked the growth in auto sales to removal of 2.5 per cent special excise duty and cut in the rate of General Sales Tax (GST) from 17 to 16 per cent.
Car sales in December 2011 plunged due to 92 per cent decline in sales of Honda Cars and flat sales of Indus Motor Company.
Honda Atlas Cars has suspended Civic and City production for December 2011 to January 2012 owing to non supply of parts from Thailand. Civic and City sales in December 2011 were recorded only 49 and 22 units as compared to 369 and 528 units in November 2011 respectively.
Nauman Khan of Top Line Securities said December 2011 sales declined as buyers preferred to defer orders due to year end phenomenon.
“Despite launch of new variants by the company in 1600cc segment and CNG vehicles (Eco), Toyota Corolla sales showed a decline on account of reduced farm income amid falling cotton prices,” he added.
Mehran leads: According to PAMA figures, production and sales of Mehran stood at 15,343 and 17,014 units as compared to 11,995 and 11,591 units in July-December 2010. Production and sales of Bolan rose to 8,052 and 8,848 units as compared to 6,978 and 6,483 units.
While other manufacturers suffered production and sales in December 2011 as compared to November 2011, production and sales of Mehran in December 2011 surged to 2,697 and 2,880 units as compared to 2,262 and 2,720 units in November 2011.
The production and sale of Bolan in December 2011 recorded at 1,603 and 1,968 units as compared to 1,380 and 1,369 units in November 2011.
Daihatsu Cuore continued to suffer as its production and sales plunged to 2,060 and 1,884 units in July-December 2011 as compared to 3,051 and 2,959 units in the corresponding period of 2010 due to reports of closure of its production in Pakistan from March this year.
Sale of Suzuki Cultus and Alto rose to 7,034 units in the last six months as compared to 5,599 while sale of Alto increased to 6,779 as compared to 5,762 units.
In 1,300cc and above, a total of 2,664 units of Honda Civic and 4,197 units of Honda City were sold in the last six months as compared to 2,918 and 3,957 units in the same period of 2010.
Suzuki Liana sales slightly stood at 199 units as compared to 188 units while Swift sales improved to 3,247 from 1,472 units.
Toyota Corolla sales grew to 20,020 units from 18,717 units.
http://www.dawn.com/2012/01/12/car-sales-surge-by-205-per-cent.html
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