Sunday, October 18, 2015

Pakistan Economy: Car Sales Up 72%; Cement Shipments Rise 16.89%

Pakistan auto industry is booming. Toyota, Suzuki and Honda factories are working around the clock in the southern port city of Karachi and eastern city of Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered, according to media reports. At the same time, increased construction activity is visible everywhere in the country.


Local car sales, excluding imported cars, jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% from 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).

Pak Suzuki led the pack with 33,770 units followed by Indus Motors (Toyota) 14,767 cars and Honda Motors 6,184 units. Industry analysts at Topline Securities expect local car sales to reach 203,653 units during the current fiscal year.

Car sales (excluding imported ones) in Pakistan grew at a five-year (FY11-15) compound annual growth rate (CAGR) of just 5.3% to 179,953 units. While volumes surged by 31% in fiscal year 2015 (FY15) on the back of the new model of Toyota Corolla, Punjab taxi scheme and an increase in car financing due to 42-year low interest rates in the country also helped, according to Express Tribune newspaper. “We forecast local car sales to grow at 13% in FY16 to reach 203,653 units,” Topline Securities reported on Monday.

In addition to car sales, domestic cement sales have also jumped by a phenomenal 16.89% to 4.29 million tons during July and August 2015 from 3.67 million tons shipped in the same period last year.

Car sales and construction activity are both believed to be driven by low interest rate financing available from banks and improved security situation across the country. With record low inflation, the State Bank of Pakistan (SBP), the nation's central bank, has cut discount rate to a 42-year low of 6%.

After its September meeting, the SBP said the rise in fixed investment financing in the energy generation and distribution, chemicals and services sectors signal possible increase in their productive activity in coming months. “The implementation of infrastructure development and energy projects under the China-Pakistan Economic Corridor (CPEC) will further enhance the improving investment environment. Therefore, there is anticipation of higher economic activity in 2015-16, which is expected to boost credit uptake,” it said.

Per Capita Cement Consumption Source: Global Cement


A dramatic decline in terrorist violence in the country since the launch of Pakistan Army's Operation Zarb-e-Azb and a big drop in international oil prices have helped drive economic recovery in the country in recent months.

Related Links:

Haq's Musings

Pakistan Auto Industry

Record Cement Sales Raise Hope Of Pakistan Economic Recovery

Credit Suisse Bullish on Pakistan Cement Industry

China-Pakistan Economic Corridor

Pakistan Army Acts Against Terrorists

Pakistan Middle Class Larger & Richer Than India's

Top Global Investor Bullish on Pakistan

The Role of Cement Industry in Economic Development of Pakistan

49 comments:

Riaz Haq said...


From Global Cement:

Quoting a recent study, Alam said that the per capita cement consumption in Bangladesh was still low at 107kg, compared to 210kg in India, 265kg in Pakistan, 310kg in Sri Lanka and 570kg in Korea, indicating future growth of Bangladeshi cement consumption.

http://www.globalcement.com/news/item/3426-mi-cement-to-add-new-unit-soon

http://www.thedailystar.net/business/cement-makers-eye-turnaround-155098

Ahmed F. said...

Way to go! May it be sustained.

Riaz Haq said...

Ahmed: "Way to go! May it be sustained."

Peace and stability are the keys to attracting more sustained investment and growth

Gibreel said...

Cement and steel go together in any construction. What is the figure for steel production?

Riaz Haq said...

Gibreel: "Cement and steel go together in any construction. What is the figure for steel production?"


It's consumption, more than production, that is a measure of construction industry's strength.

Any way, Pakistan steelmakers are having a banner year for both revenues and profits.

http://tribune.com.pk/story/965935/corporate-results-mughal-steels-profit-increases-84/

PTI said...

A hike in car sales can be partly attributed to low oil prices. Cement is too little to project whole production industry.

In my humble opinion, Foreign Direct Investment and Growth of exports are a good indicator for Pakistan economy. Rising exports depict that country is making its mark as a producer and not as a consumer. Unfortunately Pakistan is lacking any noticeable progress in both as of now. Just my opinion, not an economist... Thanks

Riaz Haq said...

PTI: "A hike in car sales can be partly attributed to low oil prices. Cement is too little to project whole production industry."

I don't understand why any good news about Pakistan is hard to digest for some of the posters here. The figures I quote in my post are industry figures, not government figures.

Anonymous said...


Salam Sir,


I am very delighted to comment here, Sir, I don't understand one thing, why is it that inspite of all this, the GDP of Pakistan is not growing with speed?

I have checked the latest news and it says that according to World Bank ,the GDP of Pakistan is the slowest in entire South Asia, even countries like Bangladesh,Sri Lanka and Burma have more GDP than Pakistan.

As far as I know or remember, GDP(Gross Domestic Product) is the measure of overall goods and services produced in a country, but inspite of this the GDP of Pakistan is slow.

Regards,

Riaz Haq said...

Anon: "even countries like Bangladesh,Sri Lanka and Burma have more GDP than Pakistan."

That's not correct. Pakistan's GDP of US $ 250 billion is almost 2X Bangladesh's and several times larger than Sri Lanka's or Burma's.

Anon: "GDP of Pakistan is slow."

Fast or slow is relative and changes over time. But Pakistan's average GDP growth of 5% since 1970 is about the same as India's. Pakistan's economy grew around 7% per year until 2007 and then slowed to less than 4%. Now it's recovering again to to historical average with lower oil prices and inflation and better security situation.

http://www.riazhaq.com/2015/10/foreign-aid-to-pakistan-blessing-or.html

PTI said...

our exports are reducing at alarming rate.our gdp growth rate is lowest in south asia.this consumerism does not show progress.it just shows increased purchasing power of tax evading elite.

Riaz Haq said...

PTI: "our exports are reducing at alarming rate.our gdp growth rate is lowest in south asia.this consumerism does not show progress.it just shows increased purchasing power of tax evading elite."

Yes, the exports are down. It indicates lower prices of exports and lower demand due to weakness abroad.

Construction industry is a huge employer. 17% rise in cement consumption means more jobs are being created in Pakistan.

Car factories working 24X7 means lots of people are working making those cars. It also means there will be more investment in manufacturing and more jobs created.
To me, that is progress.

Yusuf said...

How are car factories working 24x7? My cousin textile factory gets power only 6hrs??

Hopewins said...

Compare to peak production/sales in 2006-07
http://www.pama.org.pk/images/stories/pdf/historical-data.pdf

This is clearly another lost decade for us. Instead of Benazir & Sharif playing musical chairs, as it was during the 1990s, now we have Zardari & Sharif going through the motions. The result is the same; one lost decade after another.

There is no hope for Pakistan with this kind of civilian leadership. Perhaps it would be better to ask the US/UK to come and take over Pakistan and run it properly.

Riaz Haq said...

Yousuf: "How are car factories working 24x7? My cousin textile factory gets power only 6hrs??"

1. Industrial areas are now exempt from load shedding.

2. Some, like Indus Motors, can generate 90% of their own power off-grid.

It seems your cousin's factory is probably not located in a designated industrial estate nor does it have its own captive power plant.

http://asia.nikkei.com/magazine/20150917-IKEA-IN-THE-ZONE/Special-Report/Auto-industry-robust-despite-chronic-energy-tax-labor-woes

http://www.pakistantoday.com.pk/2015/10/19/business/no-power-load-shedding-for-industry/

Riaz Haq said...

Hopewins: "Compare to peak production/sales in 2006-07
http://www.pama.org.pk/images/stories/pdf/historical-data.pdf"


Analysts' projection for this year is production of over 200,000 cars, higher than the 180,000 in 2006-7

Hopewins said...

^RH: "Analysts' projection for this year is production of over 200,000 cars, higher than the 180,000 in 2006-7"
--------------------------------------------------

No, no. You WROTE: "Local car sales, excluding imported cars, jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% from 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA)."

This 54,812 v/s 31,899 is for (CARS + JEEPS + PICKUPS) in QI FY2016. Just CARS alone is 44,372. See your own reference:
http://www.pama.org.pk/images/stories/pdf/production-sales.pdf

The ~180,000 in 2006-07 you to which to refer is for CARS ALONE. When you add JEEPS + PICKUPS, it comes to ~180,000 + 24,000 = 204,000 total for 2006-07.

Which is what the "analyst prediction" is for 2016.

This is means that it took ONE DECADE for us to simply get back to the production/sales level of 2006-07.

If this is not a LOST DECADE, then what is?

Riaz Haq said...

North India's cement market, which currently accounts for 31 per cent of country's total consumption, is expected to make a recovery only by FY 2017-18 on account of demand revival in the infrastructure sector, according to a report.

Historically, North India is a well-balanced market with high capacity utilisation, low fragmentation and little inward dispatch threat from other manufacturing regions. But a large proportion of the cement market is dependent on rural or retail sales, Ambit Capital said in a report.

"A confluence of growth impediments - slowdown in rural sales, weak demand for organised housing and elusive infrastructure recovery - have further deteriorated cement demand/pricing in north India.

"North India's large share in major infrastructure projects exudes hopes of demand upcycle, but we believe it will take until FY'18 for a meaningful recovery," it added.

In 2014-15, North India consumed 79 million tonnes or 31 per cent of India's cement consumption, the report said.

"While 2015-16 was mooted to be a recovery year, demand has worsened, as rural sales decline sharply, real estate inventory has hit an all-time high and infrastructure recovery remains elusive with weak government tendering," it said.

Increasing prominence of regional manufacturers in a market with limited logistic challenges (largely roads) has led to price wars. Now prices in north India are at a 35 per cent discount to south India, it added.

Regional players accounted for 51 per cent capacity share in 2014-15 as against 45 per cent in 2006-07.

North India is facing growth challenges, on account of infrastructure recovery remaining elusive and rural demand deteriorating significantly in the last one year due to poor rainfall, low subsidies, wage growth and paltry MSP hikes.

Besides, real estate business is facing liquidity constraints due to government's clamp-down on black money, the report said.

It has projected that North India will be a key beneficiary of the infrastructure ramp up in India, given a majority share in large infrastructure projects (roads, Delhi Mumbai Industrial Corridor, etc).

"However, a strong and sustained volume growth will take till 2017-18 as retail demand will recover with a few quarters lag to infra demand," the report said.

Regional manufacturers with scale and cost efficiencies will benefit the most in an infra-led cement demand recovery, it added.

Pan-India players trade at rich valuations, run earnings downgrade risks and do not have the best cost efficiency to meaningfully improve RoCEs, as volumes might grow but chances of a sharp pricing recovery are scanty, it said.

http://timesofindia.indiatimes.com/business/india-business/Cement-market-in-North-India-likely-to-recover-by-FY18-Report/articleshow/47850451.cms

Riaz Haq said...

Can #Pakistan ride its tailwind to 'emerging country' status?- Nikkei Asian Review http://s.nikkei.com/1LgFSma

The country is enjoying a tailwind created by lower crude oil prices and growing remittances from overseas Pakistanis. It is also beginning to reap the fruits of the government's efforts to reduce subsidies and increase tax revenues in cooperation with the International Monetary Fund.

Macroeconomic indicators, including the budget deficit and inflation, have improved significantly. Terrorist attacks and organized crime have fallen off sharply thanks to persistent efforts by the military and security forces, drawing foreign companies back to the country.

The government has set an ambitious goal of achieving 5.5% economic growth in the current fiscal year, which runs through June 2016, and 7% growth the following year. It has laid out a road map for improving underdeveloped infrastructure and supporting the energy sector, including expanding the power grid. Insufficient tax revenues, however, mean only half of the projects meant to be underway have been implemented so far.

Coming back

On the Arabian Sea coast is Karachi, the country's commercial capital. It is not hard to spot signs here that foreign companies are returning. Every day, young people and families flock to Dolmen Mall Clifton, a large waterfront commercial complex that houses famous overseas fashion brands, U.S. fast-food restaurants and other retail outlets. Shiny new Toyota Corollas are not an uncommon sight along the city's major boulevards.

In April, Yamaha Motor resumed production in Pakistan after a seven-year hiatus. "European carmakers are ready to start operating in Pakistan," said Ghulam Murtaza Khan Jatoi, minister for industries and production. "Volkswagen is making contact with the government."

A steel-processing center for Marubeni-Itochu Steel, under construction on the outskirts of Karachi, will soon be operational. In January, German chemical giant BASF opened a new office in Lahore, the capital of Punjab Province. Coca-Cola, the U.S. beverage group, said it will make additional investments in factories and other facilities in Pakistan.

Bright spots

Power supply conditions are also gradually improving. "The government's economic policy is considerably better today than during the previous administration, when we didn't have any bright prospects. Public order has also been appreciably restored," said Shabir, 50, who runs a household goods store in the northern Pakistani city of Rawalpindi.

----

"Pakistan can now receive assistance from both the U.S. and China. It is an unprecedented favorable condition," said an executive at a major foreign bank.


Now that it is enjoying some forward momentum, the country is in a prime position to carry out structural reform. There is no disputing that Pakistan, with its population of about 190 million and more than 30 million middle-class citizens, is a major South Asian power. But whether it can finally claim the status of "emerging country" depends on the course it follows over the next several years.

Riaz Haq said...

The upcoming collaboration for the China Pakistan Economic Corridor (CPEC) will certainly bring fruitful results for Islamabad and Beijing, GEODIS (China), Director of Marketing and Sales Frank Zeng said on Wednesday.

Speaking at an interactive session titled ‘Logistics for Tomorrow’, Zeng said, “I am amazed to see the rapid pace of economic development here, and the great potential Pakistan has with regards to the logistics infrastructure, skilled human resource and trade opportunities.”

Zeng, who is responsible for sales and marketing of industrial power projects of GEODIS, one of the world’s largest freight management companies, highlighted the significance of logistics in power projects in Pakistan – a burgeoning avenue within the growing industry. Zeng, along with other panelists, presented valuable insights on strategic, tactical and operational logistics’ planning during an interactive discussion, which was organised by Pakistan’s end-to-end (e2e) Supply Chain Management Pvt. Limited.

“With the focus on energy and transportation networks, the CPEC will strengthen and enhance Pakistan and China’s bilateral trade with cardinal regard to the upcoming $1.8 billion Thar coal-based project, the 1 gigawatt solar power park and various other renewable energy projects,” said Zeng, who was also the keynote speaker.

With the government going all out to tackle the alarming energy crisis in the country, and several power generation projects scheduled to come online in both the public and the private sector in the coming years, logistics management will play a critical role in ensuring targeted timelines, according to panelists.

http://tribune.com.pk/story/977188/pakistan-hotbed-of-opportunities/

Riaz Haq said...

Reduction in interest rates has caused increase in car financing in the country to 25% as compared to 70% in 2003-07 and 5% in 2008-12.
According to experts, it may not reach to levels that were seen 10-years back because of relatively stringent rules and regulations of banks now but it is expected car financing can reach 40-50% of cars sold.
Besides locally assembled Japanese cars, used and imported cars are also sold in Pakistan. On an average, local assembled cars make up 75%, while used imported cars are 25% of total sales. Imports of used vehicles have declined by 52% to 23,484 units in FY14.
To recall, government relaxed age limit of used imported cars from three to five years in Feb 2011 and amnesty scheme for smuggled cars was also introduced in April 2012. This decision caused a huge influx of used imported vehicles in the local market which affected local sales in FY13 and FY14. The imported figure reveals that major imports of used vehicles were in the category of up to 1000cc (26,525 units in FY13 versus 16,193 units in FY14).
However, after observing significant decline in the sales of local assemblers, Govt. reversed its decision of age limit from five to three years in Dec 2012. Currently, import of used cars is declining due to reduced age limit and increased duties/taxes. This is providing much needed support to the volumetric growth of local auto assemblers particularly to PSMC as major imports were in the category of below 1000cc.
According to data, car sales in March 2015 reached a record of 21,900 units, as Pak Suzuki sold 13,000 units (up 117% YoY), Indus Motor 5,500 units (up 36% YoY) and Honda Atlas Cars 2,400 units (up 22% YoY).
Pakistan has one of the lowest car per thousand of 11 cars providing room for growth with clear signs of economic recovery. Pakistan car sales grew at 5-year (FY10-14) CAGR of 6.6% to 136,888 units. It is estimated that sales of car assemblers will grow at 3-year (FY15-17) CAGR of 10% despite influx of imported used cars (approx. 40,000 cars per annum).
During 9MFY15, car sales are likely to grow 23% YoY to 123,542 units primarily due to the new model of Corolla and Taxi scheme delivery from Feb 2015. INDU is expected to post a significant volumetric growth of 50% followed by PSMC with growth of 20% during this period.

http://www.customstoday.com.pk/used-vehicles-imports-down-by-52-to-23484-units-car-financing-up-by-25-due-to-low-interest-rate/

Sikander said...

Sooner or later savings rate has to go up otherwise economy cannot grow to absorb millions of Pakistanis. Cement use is good to see but increase in manufacture besides textiles has to happen on a large scale. Stock market going up doesn't always turn into GDP growth because it may also mean companies are or will be profitable or expenses are low etc. That is why KSE goes up but economy doesn't reflect that.

Riaz Haq said...

Sikandar: "That is why KSE goes up but economy doesn't reflect that."


Some of the fastest growing consumer driven sectors of Pakistan's economy are not even counted in official GDP figures.

"In terms of LSM growth, a number of sectors that are showing strong performance; (for example, fast moving consumer goods (FMCG) sector; plastic products; buses and trucks; and even textiles), are either under reported, or not even covered. The omission of such important sectors from official data coverage, probably explains the apparent disconnect between overall economic activity in the country and the hard numbers in LSM." State Bank of Pakistan Annual Report 2014

http://www.riazhaq.com/2015/01/state-bank-pakistans-actual-gdp-higher.html

Sikander said...

Savings rate for a developing country is very important. If it is high it allows higher and consistent consumption in the coming years = higher GDP growth that is sustained. If you look at China their GDP growth doesn't fall below 5 or 6%.
You should talk about that more because current consumption level is temporary because of low savings rate means less investment in future. Higher savings rate also means sustained and deferred consumption which is better for Pakistan economy.

Riaz Haq said...

#China-#Pakistan economic zones along #CPEC coming up fast!- http://www.khaleejtimes.com/business/economy/china-pakistan-economic-zone-is-coming-up-fast …

Pakistan takes a giant step forward and made lucrative offers to foreign and Pakistani investors to build several Special Economic Zones, or SEZs including banks, industries and businesses.

The bonanza is to ensure a fast track building of China-Pakistan Economic Zone (CPEC) - stretching from the shores of the Sea of Japan to Iran, and down south from the UAE to Central Asian Republics. The up-tick in the Pakistani economy on the back of two years of pro-business Prime Minister Nawaz Sharif's government, and the continued strength of the Chinese economy - which holds vast foreign investment funds and policy to spread out - to build a big new business zone. The new, and strong, resolve to go ahead with the project was the highlight of recent contacts between President Xi Jinping and Sharif.

"In view of the large number of potential investors, particularly from UAE-Saudi Arabia-Middle East as well as US and EU, and the interest they have shown, the government has laid down 'The eligibility criteria.' Out of the applicants, the government will pick up financially the strongest, most innovative, and the state-of-art corporations to grant land and other key facilities," a minister told this writer.

Nearly half a dozen ministers, heading ministries of finance to planning, petroleum to industries to commerce and electricity, are tasked by Sharif with speeding up the CPEC and the SEZs' projects.

"The Chinese are making the initial investment of $46 billion in the CPEC project. It includes an investment of $33 billion in energy alone so that the new projects, as well as the existing ones, and the country at large faces no energy shortage. But, the overall investment will be much larger, as the projects move ahead, production pattern expands, and their input requirements get bigger and bigger. A big push is also expected from the private Chinese corporations and the banks," Ahsan Iqbal, minister for planning told this scribe.

He said Pakistan and China will establish a joint investment and industrial cooperation working group to establish industrial zones and SEZs under China Pakistan Economic Corridor.

"It will identify the location to establish SEZs, industrial zones and industrial parks under CPEC." Major General (retired) Dr Zahir Shah has been named as its project director.Commerce Minister Khurrum Dasgir, at the same time, informed this writer, "within months of the startup of even some of the industrial units, planned to be located in the CPEZ, or the proposed individual SEZ's, we project that our exports outside the country will see a quick jump. We have already made provisions to help these units to manufacture all types of products which we can be exported, and have a big global demand. These products range from processed and 'Halal' food to chemicals. Necessary arrangements are part of our new three-year export strategy policy which will cover the period from 2015 to 2018."

"The criteria" comprises 12 conditions for grant of land, related development and construction requirements for the individual SEZ projects to ensure their viability, productivity and financial and business success for the investors and Pakistan. The investor's proposal will be approved on the basis of the following conditions: A special economic zone (SEZ) will have a minimum size of 50 acres of land.

On its completion and development, the zone should generate economic activity in terms of exports, employment and other performance indicators at least equal, or more than the total overall capital cost, incurred over a period of five years. On completion, it will provide import substitution and generate direct and indirect exports.

Riaz Haq said...

Pakistan Telecom Operators add 2.22 mln 3G/4G users in September 2015

The mobile phone operators in the country have added 2.22 million 3G/4G users during last month, taking the total count of mobile broadband users to 18.04 million.

A month back (August), the total number of users, who opted 3G and 4G services, being provided by four operators was 15.76 million, the data issued by Pakistan Telecommunication Authority (PTA) showed.

As per details, 3G and 4G users grew 14.43 % month-on-month during September 2015 i.e. highest in past six months.

The experts on Monday said the growth in mobile broadband subscriptions is due to increased usage of portable mobile broadband devices including MiFi and Wingle.

Mobilink added most number of 3G users with 878,107 new mobile broadband customers that it acquired during the reported month.

Ufone stood second in terms of adding most 3G users as it grabbed 637,131 new 3G users during September 2015.

Telenor acquired 393,969 new 3G users during the month while Zong converted 316,908 of its customers on to 3G network. Zong, at the end of September 2015, crossed 200,000 mark for its 4G users. Warid had some 156,827 4G users at the end of reported duration.

http://en.dailypakistan.com.pk/technology/operators-add-2-22-mln-3g4g-users-in-september-289/

http://www.pta.gov.pk/index.php?option=com_content&task=view&id=269&Itemid=658

Riaz Haq said...

#Pakistan Monthly Tractors sales jump 54pc to 3,096 in Sept 2015 http://nation.com.pk/business/24-Oct-2015/tractors-sale-rises-54pc …

As per the latest auto sales statistics published by Pakistan Automotive Manufacturers Association, tractor sales have started to show signs of respite with 54 per cent monthly rise in its sales to 3,096 units.
However, most of the recovery was seen in MTL sales which improved 75 per cent to 2,320 tractors while AGTL showed modest growth of 710 tractors. However, 1QFY16 tractor sales remained at 6,745 units, 28 percent lower than the SPLY.
According to data, Heavy Commercial Vehicles (HCVs) sales fell by 8 per cent MoM, mainly due to 54 per cent lower Master sales to 38 vehicles and 58 percent less GHNL sales to 30 units. On the flip side, volumes of GHNI and Hino jumped by 33 percent and 6 percent to 133 and 232 units, respectively.
Locally assembled car sales have dipped to 18,424 units in Sep’15 compared to 20,479 units in Aug’15. Experts attributed the 10 percent MoM fall to the reduced number of working days due to Eid holidays. Further, auto sales also start to fall in the first half of a fiscal year, as most of the buyers prefer to buy newer model.
During Sep’15, PSMC sales fell by 12 percent MoM to 11,389 vehicles, mainly because of sharp decline in Ravi (-23 percent to 2,859 units) and Bolan (-10 percent to 3,487 units) sales. Similarly, INDU sales slowed down by 10 percent, where Corolla sales decelerated by 6 percent to 4,672 units while Hilux sales declined by 49 percent to 258 units. On the other side, HCAR sales remained stable at 2,001 cars in Sep’15 compared to 2,002 cars last month.
Similarly, in 1QFY16, car sales have speeded up by 72 percent to the record highest level of 54,812 units, thanks to growing middle class, rising income levels and lower interest rates. During the quarter, Punjab taxi scheme doubled PSMC sales to 33,770 while new Corolla model brought 50 percent jump to the INDU sales to 14,767 cars.

Riaz Haq said...

#Pakistan's new auto policy to boost output- http://www.khaleejtimes.com/business/auto/pakistans-new-auto-policy-to-boost-output …

Government plans to expand, modernise and diversify sector.


Car sales in Pakistan are surging and will get a further boost as the country launches its new Auto Policy 2015-18, which will help it to expand production significantly.

Car sales overshot all records and surged to 151,134 units in FY-15, ended on June 30, from 118,102 units in FY-14, Pakistan Automotive Manufacturers Association (PAMA) said.

To top it all, the car sales spree was another record breaking 44,372 units during July-September - the first quarter of FY-16, PAMA said his weekend. It was a record 60.59 per cent higher as compared to the like quarter of FY-15 when the sale was 27,630 units. The credit for this big boost in Q1 of FY-16 goes to Toyota Corolla which alone sold 13,512 units up from 8,546 units in Q1 FY-15.

In the longer term perspective, the government has been working on a comprehensive plan to expand, modernise and diversify the production plan for the entire range of auto production.

Khawaja Mohammad Asif, Minister for Water and Power, headed the Cabinet's Auto Policy Committee, which took two years to finalise the policy.

The committee consulted all the stake holders, including the existing manufacturers, the potential new entrants, car sales groups, and importers of used cars on behalf of the millions of overseas Pakistanis. Thousands of used cars are annually imported by these Pakistanis as the government-permitted personal baggage for use of their families or for sale.

Key changes have been incorporated in the new Auto Policy. It now lays down: "If the existing players invest in green field production, they will be offered incentives at par witt the new entrants." It will also push the present assemblers to modernise, expand and start production of latest model cars, incorporating new technological innovations. The existing and the new producers will be treated equally in terms of incentives, and provision of bank credit and infrastructure facilities.



Alongside the improved, pro-car policies incentives incorporated in the new policy, auto sales are going up, driving the industry to move ahead.

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But Honda Civic is facing stiff competition from Toyota Corolla's newly launched model. Honda Civic sale was down to 7,806 units in FY-15 from 9,933 in FY-14.

The Industry, market and the financial analysts, going forward, are upbeat about the surge in car production and sales. Topline Securities analyst Muhammad Tahir Saeed said: "Local car assemblers registered an excellent year on year growth of 31 per cent in FY-15 versus just one per cent in FY-14, and a compound annual growth rate (CAGR) of 5.3 per cent during the last five years - FY-11-15." Tahir attributes the higher sales of cars, and of jeeps and light commercial vehicles, to "rising consumer sector dynamics and an increase in car financing due to 42-year low interest rates in the country. Imports of use cars are still hovering around 25,000 to 30,0000 units a year. The imports make around 15 per cent of car sales market in Pakistan."

Tahir and other analysts project "a 13 per cent growth during the current FY-16. The healthy growth in the auto sector reflects increase in the per capita income, improved farmer economics and the overall recovery of the economy." The current foreign currency and trade market situation will also spur auto sector in Pakistan. The growth in production and sales in Pakistan will be helped by weak Japanese Yen against the greenback. "It will positively impact the auto sector profitability," said Tahir.

Who will gain, what? Suzuki is projected to be the biggest gainer in FY-16. A Suzuki spokesman estimates "a growth of 24 per cent to 122,617 units in FY-16."

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The auto sector has been exporting spare parts totalling around $20 million annually. ...

Riaz Haq said...

#Pakistan on its Way to Growth Recovery: World Bank. Forecast: 4.5% #GDP Growth in 2015-16, 4.8% in 2016-17 http://www.worldbank.org/en/news/press-release/2015/11/11/pakistan-on-its-way-to-growth-recovery-world-bank …

Pakistan’s Gross Domestic Product (GDP) growth will accelerate to 4.5 in the current fiscal year and to 4.8 percent in FY2016/17, supported by strong services growth and a slight improvement in the industry sector, says World Bank’s newreport, “Pakistan Development Update”, launched today at the Quaid-i-Azam University in Islamabad.

The report discusses the important improvements of the external sector in Pakistan over the past few years. The foreign exchange reserves have increased from precariously low levels to appropriate level given the size of Pakistan’s imports. The current account deficit narrowed to US$2.6 billion in FY2014/15 compared to US$3.1 billion in the previous year, a result of record high remittances in the order of US$18.7 billion. External financial inflows continued strong, although lower than in the previous year. As a result, the balance of payments was positive for the second year in a row.

“There is an improvement in Pakistan’s overall economic environment. With macroeconomic stability largely restored, Pakistan can focus now on boosting development outcomes, which are not where one would expect, given the country’s income level”, says Patchamuthu Illangovan, World Bank Country Director for Pakistan. “To improve the country’s competitiveness, it is extremely important that the next phase of reforms is implemented and that Pakistan increases both public and private investment levels, which are among the lowest in the world.”

Several factors are contributing to low investment levels. Constrained fiscal space limits the government’s ability to make the necessary complementary public investments. A weak investment climate also affects private investment negatively. Another reason for the very low investment levels has to do with the low domestic savings rate in Pakistan at below 10 percent of GDP, which compares unfavorably with an average of around 25 percent in South Asia. Limited access to financial markets, high dependency ratio and low returns on financial instruments all contribute to this low rate of savings.

“Low domestic savings do not support higher investment levels”, says Enrique Blanco, Lead Country Economist. “The Government cannot make the required and complementary public investments, partly due to low revenue levels. The Government has embarked on ambitious program to improve tax policy and simplify tax administration, with the ultimate aim of increasing tax collection. There have been some improvements over the past few years – but results so far are not as expected and renewed efforts will be needed to address Pakistan’s very low revenue levels.”

This low saving-low investment trap has reduced Pakistan’s growth potential. The report also discusses the importance of increasing efforts to attract more Foreign Direct Investment from the current low levels of 0.3 percent of GDP, by improving the overall business climate and address regulatory weaknesses at the sectoral level that may be affecting the country’s ability to attract investment. The government is implementing a number of reforms to improve the country’s competitiveness. These include efforts to revive the privatization process, which will increase efficiency in management and improve service delivery, to improve access to and the quality of electricity, to promote financial inclusion and to simplify the trade regime and make it more transparent.

Riaz Haq said...

#Pakistan Keeps Interest Rate Unchanged to Support Sinking #Rupee. #SBP http://bloom.bg/1Sawrp2 via @business

Interest rate at 6% as state bank sees inflation rate rising
Move predicted by 21 of 22 economists in a Bloomberg survey

Pakistan kept its benchmark interest rate unchanged to support the rupee, which is among Asia’s worst performing currencies this quarter.
The State Bank of Pakistan kept the target policy rate at 6 percent, Governor Ashraf Wathra said in a statement in Karachi on Saturday. The move was predicted by 21 of 22 economists in a Bloomberg survey, with one seeing a cut to 5.5 percent.

“Headline inflation is expected to reverse its declining momentum,” according to the bank’s e-mailed statement. Average inflation will still remain below the target of 6 percent for the year ending June 30, with a subdued outlook for prices for oil and other major commodities, according to the statement.
A weaker rupee risks exposing weaknesses masked by Pakistan’s record foreign-exchange reserves, leaving the nation vulnerable to a balance of payments crisis. The currency has tumbled about 1 percent this quarter, extending the year’s loss to 5 percent. Even so, it’s overvalued by as much as 20 percent, the International Monetary Fund said on Nov. 6.
“If the central bank cuts rates now, it will only put excess pressure on the rupee,” Hamza Kamal, an analyst at Shajar Capital Pakistan Pvt., said by phone before the decision. “There is an expectation that the U.S. Federal Reserve will hike up its rate in December and that will have a depreciating effect on the Pakistani rupee.”
Prime Minister Nawaz Sharif needs to gradually start paying back the IMF for a $6.6 billion loan taken in 2013 to avert a balance of payments crisis.

Riaz Haq said...

Finding Value In Frontier & Emerging Markets: #Vietnam, #Pakistan, #India & The #Philippines http://seekingalpha.com/article/3698256-asias-response-to-the-federal-reserve-finding-value-in-frontier-and-emerging-markets?source=tweet … $EWM $THD $VCVOF $VNMHF
Summary

The increasingly strong USD and China's currency devaluation in August have resulted in substantial FX losses for a large number of countries in Asia.

However, the extremely high level of growth and future potential in Asia can offset this risk in certain cases.

As the Fed may increase interest rates soon, investment in Asia should be a strategic approach of investing in countries with high growth and a strong performing currency.

This article presents Vietnam, Pakistan, India, and the Philippines as superior options for investors.

Riaz Haq said...

#Pakistan gets $8b in #remittances from overseas #Pakistanis in first 5 months of current fiscal year. Up 7.6% YoY http://tribune.com.pk/story/1007907/5mfy16-pakistan-pockets-8b-in-remittances/ … …

Overseas Pakistanis sent remittances amounting to $8 billion in the first five months of 2015-16, which translates into a year-on-year increase of 7.6%, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Remittances amounted to a little less than $7.5 billion in the same months of the preceding fiscal year. They amounted to almost $1.6 billion in November alone, which is 3.3% higher than the remittances received in the preceding month, SBP data shows.

Pakistanis based in foreign countries sent home $18.4 billion in 2014-15, which translated into a year-on-year increase of 16.5%.

Inflows from Saudi Arabia were the largest source of remittances in July-November. They amounted to nearly $2.4 billion in the five months, up 11.2% from the corresponding period of the last year.

Remittances received in July-November from the United Arab Emirates (UAE) increased 12.3% to almost $1.8 billion on a year-on-year basis. Inflows from the UAE had registered the largest increase (26.1%) from any major remittance-sending country in 2014-15, SBP data shows.

In the last five months of the current fiscal year, remittances from Dubai have surged 45.8% year-on-year. But the figure for overall inflows from the UAE so far has remained subdued because of a 26% annual decline in remittances from Abu Dhabi over the same period.

Remittances from the United States and the United Kingdom remained $1.1 billion and $1 billion, respectively, in July-November. The year-on-year change in remittances from the US and the UK has been -1.5% and 4.4%, respectively.

Remittances from Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, clocked up at $960.5 million in July-November, which is 11.8% higher than the remittances received from these countries in the same months of the preceding fiscal year.

Riaz Haq said...

#Japan's #Suzuki to manufacture two new car models in #Pakistan http://tribune.com.pk/story/1010654/660-and-1600cc-variants-suzuki-considering-two-new-models-for-pakistan/ …

Pak Suzuki Motor Company (PSMC), the country’s largest carmaker, is planning to introduce two fresh variants in the local market, besides setting up a manufacturing plant for spare parts at a total investment of $430 million.

Under the new auto policy – which has been pending for quite some time – the Japanese company will look to add to its existing fleet as it looks to tap a growing market. However, an official close to the development said the investment was contingent on the government extending a tax rebate similar to that being offered to new entrants in the proposed auto policy.

Corporate corner: Pak Suzuki introduces Inazuma Aegis motorbike

According to details received here on Tuesday, PSMC will introduce a smaller car in the 660cc engine category, while also introducing a 1,600cc compact SUV.

The two new variants will take up around $110 million of the total investment. The remaining amount will go in setting up the manufacturing plant for spare parts.

Details revealed that the global head of the Suzuki company shared the investment plan with the federal minister for industries in Islamabad.

PSMC has the largest share in the country’s car market dominated by three players.

Local auto sales amounted to 93,570 units in the first five months of the ongoing fiscal year, up 66% compared to the same period last fiscal year. PSMC’s share in the five-month sales stood at 58,098 units, owed largely to the Punjab government’s taxi scheme.

The auto policy

The government has been working on finalising the auto policy for some time. It is looking to attract investment, besides offering incentives to existing and new players. The ruling PML-N is also reportedly keen on bringing a German manufacturer in the Pakistani market.

While the industries ministry had forwarded the auto policy draft to the Economic Coordination Committee, the decision was deferred pending further consultation.

Pak Suzuki posts whopping increase in profit

PSMC’s plans

Kinji Saito, the global head of the Suzuki Motor Company, called on Federal Minister Ghulam Murtaza Khan Jatoi in Islamabad on Tuesday. Details revealed that Kinji informed Jatoi that the company was looking to introduce the two variants, but was hoping for a tax rebate similar to the one that could be offered to new entrants in the new auto policy.

It was further said that the price of the 660cc variant would be close to that of Suzuki Mehran’s. Jatoi, however, said its price needed to be less than that of Mehran.

It was also mentioned that Mehran and Cultus variants would be discontinued in the next five years, but are likely to be replaced with fresh models.

Jatoi, in a statement released after the meeting, welcomed the company’s plans, saying that Pakistan needed fuel efficient, eco-friendly and cheaper cars to cater to the market.

The minister said that PSMC’s share in the Pakistani market was significant, but emphasised that the company needed to bring its prices down.

“Pakistan is a big market for the auto industry, therefore special feature like safety measures, fuel economy, environment friendly and affordable prices range are particular needs of our country,” the minister said.

“We are rich in human resource while Japan owns the latest technology. We can benefit from each other’s strengths.”

Jatoi also assured the Suzuki’s Global Head that protection would be extended to all companies operating in Pakistan in the upcoming Auto Development Policy.

Riaz Haq said...

According to the latest figures from the IMF, Pakistan GDP reached $270 Billion mark in 2015, up from $246 Billion in 2014, an increase of $24 Billion.

Pakistan's PPP GDP increased from$884.231billion to $930.759 Billion, an increase of $46.528 dollar

Pakistan's per capita nominal GDP for 2015 i $1,427.085, up from $1,325.790 in 2014.

Pakistan per capita PPP GDP is $4,902 for 2015, up from $4,749 in 2014.

http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/weorept.aspx?pr.x=92&pr.y=13&sy=2014&ey=2016&scsm=1&ssd=1&sort=country&ds=.&br=1&c=564&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC&grp=0&a=

Riaz Haq said...

#Chinese #Trucks Market Share Could Surpass #Japanese Share in #Pakistan. #China #Japan #Pakistan #CPEC http://bloom.bg/1QVIzx3 @business

Chinese trucks may become a more common sight than Japanese rigs on Pakistan’s roads as rising infrastructure investment creates demand for cheap and durable commercial vehicles.
To benefit from their expected growth in popularity, Karachi-based Ghandhara Nissan Ltd. began assembling China’s Dongfeng trucks in 2013, in addition to Japan’s UD brand. Ghandhara forecasts its Chinese truck sales will more than double to about 200 units in the year ending June and surpass UD deliveries in the next two years, according to Muazzam Pervaiz Malik, senior executive director for marketing at the company.

“Initially they were scared about the quality, but China has improved,” Malik said in an interview. “With the China-Pakistan economic corridor, more dams and motorways, we expect truck demand to grow.”
South Asia’s second-largest economy is forecast to grow at the fastest pace since 2008 and is seen as a beneficiary of the $45 billion that China has pledged in infrastructure investment to more tightly link its economy with Europe through central and western Asia.
The spending may help drive a 50 percent increase in truck sales to as many as 7,000 units a year by 2020, according to Ghandhara’s estimates. The company’s revenue will rise about 10 percent in the year ending June 30, buoyed by higher Dongfeng sales, Malik said.
Ghandhara’s stock has surged more than threefold this year for the biggest gain among auto retailers globally, buoyed by the truck demand and expectations that it will begin producing passenger cars in 2017. The shares dropped 4.7 percent to 181.4 rupees in Karachi yesterday.
The local newspaper Dawn reported in August that Ghandhara plans to start assembling Nissan Motor Co.’s Datsun cars in 2017. Ghandhara declined to comment on its future plans, while Nissan said no decision has been made on production in Pakistan.

Riaz Haq said...

Volkswagen's #China Partner Plans to Build VW V2 Hatchback Cars in #Pakistan in 2016 http://bloom.bg/1kYVe3Z via @business

China FAW Group Corp., a Chinese partner of Volkswagen AG, plans to start assembling cars in Pakistan to tap growing demand as measures to curb terrorism boost growth in the South Asian economy.

The company seeks to sell 10,000 vehicles, including vans, cars and pickups, in 2018 after it begins local assembly of the V2 hatchback at the end of this year, Hilal Khan Afridi, chief executive officer of Al-Haj FAW Motors Pvt., said in an interview in Karachi. Al-Haj FAW is the Chinese group’s local venture and began selling imported V2’s in January last year.
FAW will be the first carmaker in a decade to start assembling in Pakistan, where the economy is set to grow at the fastest pace since 2008 as Prime Minister Nawaz Sharif’s government tackles power shortages and terrorism. China’s President Xi Jinping has also pledged to invest $45 billion in the country, boosting the outlook for expansion.
“Initially we had a lot of difficulty to convince them to help us with technical expertise,” said Afridi. “Now that the Chinese market has slowed down they have increased their interest in international markets. It’s a good sign for us.”

Chinese spending on infrastructure may help Karachi-based Ghandhara Nissan Ltd. double sales of Chinese Dongfeng trucks. Al-Haj FAW sold about 3,400 vans and pickups along with 535 locally assembled trucks last year. The company plans to invest 1 billion rupees ($9.5 million) to assemble cars in Pakistan.

“Things are looking up for the auto industry,” says Ahmed Hanif Lakhani, analyst at Karachi-based Arif Habib Ltd. “The economy is growing and consumer demand is rising with low interest rates making leasing more feasible.”
Pakistan’s economy is estimated to expand 5.5 percent in the year to June, according to the Ministry of Finance. Car sales in the nation increased 52 percent to 15,724 units in November from a year earlier, according to the Pakistan Automotive Manufacturers Association.

Riaz Haq said...

#Pakistan car sales jump 66% to reach 111,720 units in first 6 months of Fiscal Year 2015-16 #CPEC

http://www.pakistantoday.com.pk/2016/01/12/business/car-sales-up-66-to-reach-111720-units/ …


The sales of the locally assembled cars have gone up by 66 per cent to reach 111,720 units in the first half of the current fiscal year (2015-16) against only 67,426 units in the same period last year, the data released by the Pakistan Automotive Manufacturers Association (PAMA) said on Monday.

However, the sales of locally assembled cars and tractors (including LCVs) declined by 5 per cent to 18,150 units in December 2015 due to seasonal slowdown as buyers tend to defer car purchases until next year.

“The main reason behind the rising sales of cars is said to be declining interest rates of the banking channels especially for the auto financing as well as overall improvement in the economic situation of the country,” said Topline Brokerage House analyst Muhammad Tahir Saeed.

In a recent development, Pak Suzuki (PSMC), Indus Motors and Honda increased the prices of all of their models by 1 per cent in December 2015 following the government decision of increasing one per cent custom duty on the import of all accessories of the vehicles. Car assemblers were able to pass on the cost hike to the customers due to strong demand in the country.

The government has not yet announced the Auto policy for the next five years but Engineering Development Board (EDB) has submitted the final draft policy to the Ministry of Industries in December 2015. In the policy, the EDB has recommended to give incentives to the newcomers in the auto sector and asked the government to force the companies to deliver the vehicles on time and in case of non-delivery in 60 days, the company will pay back interest on the total amount paid by the customers at the time of the booking.

The analyst forecast that local car sales will grow at 15 per cent in the rest of the fiscal year 2015-16 to reach 206,777 units. This lower growth is due to completion of taxi scheme in February 2016 and decline in Honda Civic volumes in anticipation of new model, which is expected to hit the market in July 2016.

Amongst individual companies, PSMC sales increased by 97 per cent year on year to 70,482 units in the first half 2015-16 primarily due to Punjab government’s taxi scheme.

Contrary to historical trend of December, volumes increased by 3 per cent month on month in December 2015 primarily due to the taxi scheme. Historically, it has been observed that customers defer their buying in December due to year-end phenomenon as they usually prefer to purchase and register their vehicles in the first month of the new year.

INDU sold 30,481 units in first half 2015-16 up from 22,883 units in the same period last year.

In Dec 2015, INDU sales stood at 4,738 units, up 16 per cent YoY. On MoM basis, sales declined by 14 per cent YoY due to year-end phenomenon.

Honda sold 10,610 units in the first half 2015-16 compared to 8,578 units during the same period last year. In December 2015, HCAR sold 1,028 units, up 49 per cent YoY (down 33 per cent MoM).

“Volumes of Honda Civic are expected to dry out in the coming months in anticipation of new model launch in July 2016,” the analyst said.

DELAY IN SUBSIDY AFFECTS TRACTOR SALES:

Pakistan’s tractor segment posted a decline of 41 per cent YoY during the first half 2015-16 to reach 12,375 units. This decline is because of the delay in the launch of provincial tractor subsidy schemes. Punjab and Sindh governments announced in the 2015-16 budget that a subsidy of 25,000/29,000 would be offered on each tractor.

Millat Tractors (MTL) and Al-Ghazi Tractors (AGTL) both witnessed a decline in their volumes during first half of 2015-16.
---
Trucks and buses segment of Pakistan’s automobile sector posted an increase of 40 per cent YoY to reach 2,645 units during first half 2015-16. This surge was due to rising demand because of the China Pakistan Economic Corridor (CPEC) project and improving law and order situation in the country.

Riaz Haq said...

500 sq yds to 1000 sq yds DHA #Karachi homes selling for half a million to a million us dollars average. #Pakistan

http://tribune.com.pk/story/982816/karachi-popular-lahore-and-islamabad-fail-to-match/ …

The real estate market entered the fourth quarter smoothly, banking on the success of several popular property markets.

This followed a continuous rise in prices of real estate in major cities – Lahore, Karachi and Islamabad – in the third (July-September) quarter of 2015.

Why Lahore is better than Karachi today

Even though some projects of prominent developers did face a few impediments, this was not a reason enough to raise major concerns, according to a report released by zameen.com, an online property portal.

According to the report, Karachi’s realty market performed brilliantly. There was just one exception – Bahria Town Karachi – which posted unfavourable numbers as prices of 250 square yard plots fell 5.39%. Similarly, a drop of 3.85% was recorded in 500 square yard plots in the third quarter.

DHA Karachi and DHA City Karachi, on the other hand, did not disappoint and gave investors encouraging returns. DHA Karachi recorded a sharp 8.27% price gain for 500 square yard plots and an even sharper rise of 12.35% for 250 square yard plots.

DHA City Karachi registered increases of 16.60% and 11.65% in prices of the two categories respectively.

Five reasons why Karachi is better than Dubai

DHA Karachi once again emerged as the most expensive locality, where the average sale price of a 500-square-yard house stood at Rs60 million and that of a 250-square-yard home was Rs41 million.

Lahore market

The property market of Lahore saw a humble upward movement. Although many major localities continued to excite investors by registering good levels of growth, DHA Lahore remained merely stable in the one-kanal category with prices dropping a negligible 0.69%.

However in the 10-marla category, a sharp drop of 6.61% was registered in the third quarter, said the report.

There could be a variety of reasons behind this, including the imposition of withholding tax on banking transactions, a rise in taxes and the income source disclosure notices sent to investors. Most significantly, the take-off of DHA projects in Bahawalpur, Multan and Peshawar may have shifted investor focus.

10 reasons why we love Karachi

In contrast, Bahria Town and LDA Avenue-I performed well despite multiple pending litigations. Bahria Town depicted a sharp price rise of 14.57% for one-kanal plots and a 5.32% increase for 10-marla plots. LDA Avenue-I posted a 5.04% rise in the one-kanal category and 7.63% gain in the 10-marla category.

Islamabad market

The real estate market of Islamabad showed a mixed picture. Sector E-11 registered price increases of 3.33% and 1.69% and F-11 recorded rises of 2.22% and 3.73% for one-kanal and 10-marla categories respectively.

Bahria Town experienced a sharp 5.66% rise for one-kanal plots whereas prices of 10-marla plots remained stable, with a negligible drop of 0.76%. Activity in DHA Islamabad seemed listless this time around. The one-kanal category saw a 1.57% drop, while 10-marla plots recorded a 4.30% drop.

The status of DHA Valley and the intended development of Dadocha dam on its site remained controversial. Needless to say, investor confidence has taken a hit.

Karachi population to increase by 50% in 15 years

However, DHA Islamabad has recently announced plans to allot alternative plots to those affected by the DHA Valley problems, so things could start to look better soon.

Predictably, Sector F-11 remained one of the most expensive localities, where the average price of a one-kanal house stood around Rs69 million and that of a 10-marla house was around Rs36 million.

http://www.zameen.com/Homes/Karachi_DHA_Defence-213-2.html#reference

Riaz Haq said...

Car sales in #Pakistan soared 45pc in July-Jan to 107,000 units - #automotive #manufacturing #economy http://goo.gl/P9TMe0 via @PKKHTweet

Sales of locally assembled cars jumped 44.85 per cent to 107,907 units during the first seven months (July-January) of 2015-16 from 74,497 units in the same period last year, Pakistan Automotive Manufacturers Association data showed on Wednesday.

In 1,300cc and above, buyers lifted overall 49,168 units as compared to 40,388 a year ago. Toyota Corolla led the sales with 33,225 units as compared to 26,593 in July-January 2014-15. Combined sales of Honda Civic and City increased to 13,625 as compared to 11,799 units last year. Suzuki Swift sales inclined to 2,318 from 1,974 units.

Total sales of 1,000cc cars swelled to 14,145 from 9,973 units in the same period last year. Suzuki Cultus share was 8,976 as compared to 7,747 units, followed by Wagon R — 5,165 units from 2,180 a year ago.

Suzuki Mehran and Bolan sales went up to 22,292 and 22,302 from 16,164 and 7,972 units, respectively.

Total vehicle sales, including LCVs, vans and jeeps, registered a 57pc growth to 133,437 units during the period under review as compared to 85,135 a year ago.

Mohammad Tahir Saeed of Topline Securities attributed the sector’s performance to the rise in auto financing, Punjab Taxi Scheme and improving law and order situation.

He predicted the local car sales to grow 15pc (206,777 units) in FY16 due to expected completion of taxi scheme in February 2016 and decline in Civic sales volume in anticipation of new model by mid-2016.

He said that the delivery time of new Toyota Corolla was still hovering between two to four months.

Tractor sales, however, posted a 40pc year-on-year decline to 14,727 units due to the delay in provincial tractor subsidy schemes.

Punjab and Sindh governments, in budget FY16, announced a subsidy of 25,000-29,000 tractors but, as per media reports, Punjab has suspended its scheme due to lack of funds.

Millat tractors sales declined to 9,178 from 14,965 units while Al-Ghazi tractors sales dipped 45pc year-on-year to 5,004 units.

Trucks and buses sales, however, posted an increase of 40pc year-on-year to 3,246 units during the period.

Toyota Fortuner sales fell to 332 from 432 units and Sigma Defender sales declined to 164 from 293 units a year ago. Suzuki Ravi sales climbed to 22,136 from 7,629 units, while Toyota Hilux increased to 2,891 from 2,273 units.

Riaz Haq said...

July 2015-Jan 2016: #Pakistan domestic #Cement dispatches up 16% http://tribune.com.pk/story/1040627/july-jan-cement-dispatches-amount-to-21-3m-tons-up-6-38/ …

Cement dispatches in the first seven months (Jul 2015 to Jan 2016) of the current fiscal 2015-16 increased by 6.38% to 21.3 million tons compared to 20.022 million tons during the same period of last fiscal, according to latest data released by the All Pakistan Cement Manufacturers Association (APCMA).

This positive overall growth is attributed to the robust increase in domestic dispatches during this period. Local dispatches increased by 15.57% to 17.9 million tons from 15.5 million tons in the period under review.

On the contrary, exports declined to 3.4 million tons from July 2015 to January 2016 against 4.5 million tons from July 2014 to January 2015, down 24.98%.

Factories located in the north of the country dispatched 14.7 million tons in local markets from Jul 15 to Jan 16 against 12.9 million tons during the same period of last fiscal year, depicting a growth of 14.12%.

South-based factories registered a higher growth of 23% in domestic dispatches from July 15 to Jan 16 as their local sales recorded in this period were 3.12 million tons against 2.53 million tons during the same period last year.

In exports, north-based mills registered a decline of 22.3% as exports were restricted to 2.2 million tons in first seven months of this fiscal against 2.782 million tons during July 14 to Jan 15. South-based factories also suffered a drop in exports during the first seven months of current fiscal year by 29.2% to 1.243 million tons from 1.756 million tons in corresponding period of last fiscal year.

The industry dispatched 3.085 million tons of cement in the month of January 2016 compared with 2.898 million tons during January 2015, a growth of 6.47%.

Again this was mainly attributed to healthy domestic sales. Local dispatches during January 2016 were 2.69 million tons against 2.419 million tons during January 2015 showing growth of 11.54%.

Export dispatches during January 2016 dropped to 386,562 tons against 478,000 tons during January 2015 showing decline of 19.19%.

Economic planners are not giving due attention to the rapidly declining cement exports, according to APCMA press release.

Riaz Haq said...

#Pakistan automobile industry booming with sales up 31% year over year - http://www.khaleejtimes.com/business/auto/pakistan-auto-industry-rides-a-high …

Pakistan's auto industry is enjoying a boom. All leading brands such as Suzuki, Toyota and Honda have reported high profits.

The biggest car producer - Suzuki - shot down the industry's production record growth of 31 per cent by upping its own output by 54 per cent in 2015. Suzuki maintained its leadership among the country's Big 3.

The sale of cars manufactured and assembled in Pakistan climbed to 179,953 units in 2015 from 136,888 units in 2014, the Ministry of Industries said.

What is pushing this car buying and production spree? The yen stays weak against the greenback, helping car assemblers to buy imported spare parts for cheap prices. Imported spares account for around 75 per cent of the equipment which goes into assembling cars. Commercial banks' interest rates are now the lowest in 42 years, making car financing cheapest in decade.

New car models are attracting buyers as Pakistanis enjoy a higher purchasing power. "The latest growth in the automobile sector confirms a rising per capita income in Pakistan, improved economics of the auto sector and overall recovery of the economy," said Tahir Saeed, a financial market researcher.

There is big scope of more investment inflows to expand production capacity as competition among car manufacturers increases.

Auto is perhaps the only industry which is doing well at a time when others - ranging from textiles to farm products - are hit hard by stagnating exports. Reduced foreign demand, difficulties related to the international oil price crash and energy shortages are key factors hitting other industries.

"The auto industry must now focus on enlarging output of its cars and export more units to countries in its neighbourhood. It should also tap new markets in Central Asia," Minister for Commerce Khurrm Dastgir said.

Suzuki has unveiled its operational and financial results for 2015. The company is jointly owned by Pakistan Automobile Corporation (Paco) and Suzuki Motor Corporation of Japan (SMC). SMC owns 73 per cent of the joint venture.

Paco said: "In January to September 2015, Suzuki tripled its pre-tax profit to Rs6.33 billion as compared to Rs2.18 billion in the like period of the previous year."

Toyota cars assembled by Indus Motors is moving up the ladder fast. Its report said: "Toyota sold 57,000 car in 2015 - a record in the company's history. We have exceeded production capacity which is usually 54,800 units a year."

Riaz Haq said...

#Pakistan steel industry booming with production of 4 million tons to meet rising demand last year

http://tribune.com.pk/story/1053741/local-economy-cpec-to-help-steel-industry/ …


The start of mega development schemes and power projects under the China-Pakistan Economic Corridor (CPEC) will boost the annual demand for steel products by more than 30% to 6 million tons from 4 million tons, said an industry representative.

Pakistan Steel Re-Rolling Mills Association (PSRMA) Vice Chairman Akhtar Saeed said that 475 steel making units (large and small size) were operating in the country and their annual production was around 4 million tons. The large units’ production share was around 1.2 million tons.

Saeed said that more incentives were needed to attract new investment to the steel industry in the country. “The government should come up with a new comprehensive and targeted policy for the important sector of steel and they should have a detailed consultation with PSRMA.

“As a result of the increasing demand, new steel units would be set up. Thus, more job opportunities would be created and the government would get more taxes.

Riaz Haq said...

#Motorcycle production in #Pakistan reaches nearly 2m per annum. #Manufacturing http://www.dailytimes.com.pk/business/12-Mar-2016/motorcycle-production-in-pakistan-reaches-nearly-2m-per-annum …

Lack of adequate transportation infrastructure, higher inflation and poor economy made the low-powered vehicles apex priority of Pakistanis as two-wheeler production increased by 10% to 19, 12,944 units in 2015.

"Lower oil prices and improved business environment has provided a much needed boost to motorcycle industry in the outgoing year as production went up significantly due to rising demand," said Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Shaikh.

He said that the government has to end the cartelisation of Japanese car and motorcycle assemblers in order to flourish the local industry otherwise the industry would remain on sluggish trajectory in coming decades as well.

He urged the government to abolish imports regime and duty structure for various motorcycles parts, as the duty on imported parts should be the same at 25 % custom duty instead of existing five different structures.

Shaikh said the industry has enough capability to cater to the rising demand of two-wheelers by producing more than 4 million motorcycles per year. However, he added that the government's apathetic attitude towards this dynamic sector has put the industry on a slow track, which has restricted production to only 2 million per annum.

"About half of the parts of motorcycles are being made in Pakistan and half of them are imported from different countries while the local industry is capable to make full production if the government patronises the sector," Sheikh said, adding that the domestic motorcycle industry now completely dominates the local market and not even a single motorcycle has been imported since 2007-08.

Detailed assessment of Pakistan Bureau of Statistics (PBS) latest data reveals that the motorcycle production including locally made Japanese brand and Chinese made imported motorcycles' brand stood at 1,912,944 units in the 2015, registering 10% growth over the same period of last year to 1,743,039 units. In December 2015, total 156,415 motorcycles were produced in the country, registering 17% growth over the production of 134,230 motorcycles in December 2014.

Recently, Atlas Honda Limited has announced an investment of $100 million in the expansion of its motorcycle operations in Pakistan. The first motorcycle produced from the new line will arrive in the market by the beginning of October 2016. The expansion will lead to the generation of 1,800 direct jobs and 5,000 jobs at associated companies and parts manufacturers.

Shaikh told Daily Times that around 4 million of motorcycles are sold illegally in Pakistan due to which the national kitty is being deprived of huge revenue in terms of taxation. "Due to this lack of concern by law enforcement agencies, the national kitty is continuously missing huge revenue in terms of taxes and duties as many local motorcycles assemblers do not show sale of unregistered motorcycles in tax documents," he added.

The motorcycle production in the country is being run by about 100 motorcycle assemblers, including one dozen cottage manufactures, which produce less than 1,000 units.

Riaz Haq said...

#Pakistan announces new #auto industry policy to encourage greenfield investments in #manufacturing http://tribune.com.pk/story/1068402/long-awaited-auto-policy-approved-door-wide-open-for-new-entrant/ …

In the hope of attracting a European carmaker, the government on Friday approved a new automobile policy, which offers tax incentives to new entrants to help them establish manufacturing units and compete effectively with the three well-entrenched assemblers.

After a hiatus of almost two and a half years, the Economic Coordination Committee (ECC) of the cabinet gave the go-ahead to the Automotive Development Policy 2016-21, according to an announcement made by the Ministry of Finance.
However, the government did not change its policy for used car imports, leaving consumers with a narrow range of choice until new brands of good quality are produced in the domestic market.

The Federal Board of Revenue had proposed that import of up to five-year-old used cars should be allowed compared to the current three-year ceiling. It also called for opening imports for commercial purposes.

The automotive policy will be formally launched on Monday. Industries and Production Minister Ghulam Murtaza Jatoi did not attend the ECC meeting.

“The existing three car manufacturers will not be entitled to the benefits that are being offered to the new investors,” said Miftah Ismail, Chairman of the Board of Investment, while talking to The Express Tribune.

The policy was aimed at enhancing consumer welfare and boosting competition besides attracting new players, he added.

Ismail said greater localisation of auto parts had been ensured in the policy and in case the new entrants were unable to achieve the targets, they would be penalised.

The government has allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility. It has also permitted import of 100 vehicles of the same variants in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after the groundbreaking of the project.

A major incentive for the new investors is the reduced 10% customs duty on non-localised parts for five years against the prevailing 32.5%. For existing investors, the duty will be slashed by 2.5% to 30% from the new fiscal year 2016-17.

Similarly, localised parts can be imported by the new entrants at 25% duty compared to the current 50% for five years. For existing players, the duty on import of localised parts will be brought down to 45% from the new fiscal year, beginning July.

In the CBU category, customs duty on cars up to 1,800cc engine capacity has been reduced by 10% for two years – 2017-18 and 2018-19. This will be applicable to the existing players as well and will encourage reduction in car prices.

A single duty rate will be applied to the localised and non-localised parts after five years of the new policy. The present duty structure will continue for seven years for the new investors.

The Board of Investment will provide a single point of contact for all new investors. They will be required to submit a detailed business plan and relevant documents to the Engineering Development Board (EDB) for assessment.

Riaz Haq said...

#Pakistan woos Renault-Nissan in push for #automobile #investments http://reut.rs/1XbdcQR via @Reuters

With the economy growing at its fastest pace in eight years, the local currency stable against the dollar and interest rates at their lowest in 42 years, Pakistani officials believe the country is once again on the radar of investors seeking to tap into a market of nearly 200 million people.

Officials are touting a new auto policy, skewed in favor of new entrants, that includes offering foreign car manufacturers lower duties as an incentive to set up plants in Pakistan or revive shuttered ones.

"We expect that there will be one or two foreign investors coming into Pakistan," said Miftah Ismail, chairman of Pakistan's Board of Investment, who has been talking to car makers about setting up assembly plants for the local market.

Ismail told Reuters he had held talks with Japan's Nissan (7201.T) and alliance partner Renault (RENA.PA) for "some time", and last month met Fiat (FCHA.MI) executives in Italy for the first time.

Previous discussions also involved Germany's Volkswagen.

"I hope some people will bite," he said.

A source close to Renault said Pakistan was under consideration for new production investment, along with other potential locations, but added that discussions were at a very early stage. In an e-mailed statement, the company said it had "no news to announce at this time".

Nissan chief spokesman Jonathan Adashek said: "Pakistan is certainly a market of interest for us at present", but added no final decision had been made.

Riaz Haq said...

#Pakistan #automobile sales reach 184,099 units in 10 months, up 29% in July-April 2015-16 period http://www.pakistantoday.com.pk/2016/05/12/business/car-sales-reach-184099-units-up-29-in-july-april-2015-16/ …

Owing to the lower interest rates in the banking sector, Pakistan’s local car assemblers Tuesday showed 29 per cent year-on-year growth in July-April 2015-16. The local vehicle sales stood at 184,099 units versus 142,814 units during the same period last year.

An analyst of a brokerage house said that the main reason behind the rising sales of cars is auto financing as well as overall improvement in the country’s economic situation. The interest rates are at a 42-year low and below six per cent. The banks, investment companies and others are providing auto financing to use their excess liquidity.

PAK SUZUKI MOTORS COMPANY:

Pak Suzuki Motor Company (PSMC) sales increased by 41 per cent year on year to 109,628 units during the last 10 months of 2015-16 primarily due to Punjab government’s taxi scheme.

Volumes decreased by 18 per cent YoY (1 per cent MoM) in April 2016 (second month after the completion of the Taxi Scheme) to 8,965 units primarily due to completion of Taxi Scheme.

INDUS MOTORS:

Indus Motors (INDU) sold 52,987 units during the last 10 months of 2015-16 versus 45,978 units during the same period of last year. In April 2016, sales fell 6 per cent YoY to 5,483 units. On MoM basis, sales declined 5 per cent due to fewer working days in April 2016 compared to March 2016.

It is important to note that delivery time for the new Corolla model is still hovering in the range of 2-4 months depending on the variant.

HONDA:

The Honda Company is going to launch its New Honda Civic model, which is expected to hit the market in the 2nd half of this year. Volumes of Honda Civic are expected to dry out in the coming months in anticipation of the new model launch in the 2nd half of 2016.

Honda Cars sold 21,293 units in the first 10 months of 2015-16 compared to 18,781 units during the same period of last year. In April 2016, Honda sold 2,751 units, up 16 per cent YoY (flat MoM).

The analyst said that Honda City remained the major contributor in this growth during the said period.

MILLAT TRACTORS (MTL) & AL GHAZI (AGTL):

Pakistan’s tractor segment posted a decline of 31 per cent YoY during July-April 2015-16 to reach at 26,586 units. This decline is because of the delay in the launch of provincial tractor subsidy scheme of 25,000 to 29,000 per tractor which was announced by Punjab and Sindh governments in the budget for the fiscal year 2015-16.

Millat tractors (MTL) and Al-Ghazi tractors (AGTL) both witnessed a decline in their sales volumes during the last ten months as farmers were waiting for the execution of announced subsidy schemes by Punjab and Sindh governments. Tractor manufacturers demanded of the governments to either execute or shelve the announced scheme so that farmers may resume their normal purchasing.

MTL sold 15,974 units in July-April 2015-16 compared to 23,426 units during the same period last year. The company’s sales decreased by 29 per cent YoY to 2,440 units in April 2016 (down 4 per cent MoM).

During the current fiscal year, AGTL witnessed a decline of 30 per cent YoY in sales to 9,882 units. The company sold 1,935 units in April 2016, up 23 per cent YoY (7 per cent MoM). Farmers seem to have resumed regular purchases due to uncertainty in the subsidy scheme.

Trucks and buses segment of Pakistan’s automobile sector has posted an increase of 42 per cent YoY to reach at 5,076 units during the first 10 months of FY16. This surge in demand is because of China-Pakistan Economic Corridor and improving law and order situation in the country, the analyst said.

Riaz Haq said...

#Pakistan: 13% YoY surge in #cement sales boosts producers' profits http://www.cemnet.com//News/story/159199/pakistan-13-yoy-surge-in-cement-sales-boosts-producers-profits.html#.VzOJi7mb6Yk.twitter …

Pakistan's cement industry's profit rose 30 per cent to PKR45.169bn (US$431.6m) in the first nine months of the current fiscal year as there was a surge in sales, supported by soft oil and 11-year low coal prices, according to the Topline Securities Ltd brokerage.
In the July-March period of the last fiscal year, the local industry earned PKR34.847bn. The profitability growth was supported by 13 per cent YoY growth in sales as a result of higher local dispatches, firm local pricing, 802 basis points increase in gross margin to 40.9 per cent and 16 per cent decrease in selling and distribution expenses, said Topline Securities analyst Nabeel Khursheed.

The brokerage assessed the financial results of 15 cement markers, out of 19 players, representing almost 100 per cent of the industry's market capitalisation. The report said the industry's profit grew 26 per cent to PKR16.303bn in the third quarter (Jan-March) of 2015-16 on the back of 20 per cent increase in local dispatches and rise in gross margins.

Rising local volumes, stable local pricing and declining input costs (coal prices near 11-year low and falling power tariff) are likely to support margins of cement manufacturers, Mr Khursheed said.

"We downplay any risk of a price war amongst cement manufacturers as the industry is already operating at around 85 per cent of capacity utilisation. If the local industry continues to grow at the same pace, we expect demand to outpace supply in the near future," he added.

The brokerage report said local demand was strong because of a rise in housing projects and start of China-Pakistan economic corridor projects. Cement sales increased 9.93 per cent to 28.34Mt YoY for the period July-March 2015/16. Local dispatches rose 18 per cent to 24Mt and cement exports fell 19 per cent to 4.406Mt in period under review.

Riaz Haq said...

Dailytimes | #Motorcycle production in #Pakistan reached nearly 2m per annum in 2015 http://go.shr.lc/1sZnPv1 via @Shareaholic

Lack of adequate transportation infrastructure, higher inflation and poor economy made the low-powered vehicles apex priority of Pakistanis as two-wheeler production increased by 10% to 19, 12,944 units in 2015.



"Lower oil prices and improved business environment has provided a much needed boost to motorcycle industry in the outgoing year as production went up significantly due to rising demand," said Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Shaikh.



He said that the government has to end the cartelisation of Japanese car and motorcycle assemblers in order to flourish the local industry otherwise the industry would remain on sluggish trajectory in coming decades as well.



He urged the government to abolish imports regime and duty structure for various motorcycles parts, as the duty on imported parts should be the same at 25 % custom duty instead of existing five different structures.



Shaikh said the industry has enough capability to cater to the rising demand of two-wheelers by producing more than 4 million motorcycles per year. However, he added that the government's apathetic attitude towards this dynamic sector has put the industry on a slow track, which has restricted production to only 2 million per annum.



"About half of the parts of motorcycles are being made in Pakistan and half of them are imported from different countries while the local industry is capable to make full production if the government patronises the sector," Sheikh said, adding that the domestic motorcycle industry now completely dominates the local market and not even a single motorcycle has been imported since 2007-08.



Detailed assessment of Pakistan Bureau of Statistics (PBS) latest data reveals that the motorcycle production including locally made Japanese brand and Chinese made imported motorcycles' brand stood at 1,912,944 units in the 2015, registering 10% growth over the same period of last year to 1,743,039 units. In December 2015, total 156,415 motorcycles were produced in the country, registering 17% growth over the production of 134,230 motorcycles in December 2014.

Recently, Atlas Honda Limited has announced an investment of $100 million in the expansion of its motorcycle operations in Pakistan. The first motorcycle produced from the new line will arrive in the market by the beginning of October 2016. The expansion will lead to the generation of 1,800 direct jobs and 5,000 jobs at associated companies and parts manufacturers.



Shaikh told Daily Times that around 4 million of motorcycles are sold illegally in Pakistan due to which the national kitty is being deprived of huge revenue in terms of taxation. "Due to this lack of concern by law enforcement agencies, the national kitty is continuously missing huge revenue in terms of taxes and duties as many local motorcycles assemblers do not show sale of unregistered motorcycles in tax documents," he added.



The motorcycle production in the country is being run by about 100 motorcycle assemblers, including one dozen cottage manufactures, which produce less than 1,000 units.

Riaz Haq said...

#Pakistan #cement industry continues growth. Per capita consumption to rise from 147kg in 2015 to 250kg in 2020.

http://tribune.com.pk/story/1122920/cement-industry-poised-continued-growth/

Pakistan’s cement industry will continue to grow over the next few years due to strong pricing power and contraction in supply and demand gap, a Topline Securities report said on Tuesday.

The capacity utilisation of Topline Cement Universe – a sample of cement companies listed on Pakistan Stock Exchange (PSX) – is likely to reach 96% in fiscal year 2018 from 78% in fiscal year 2015.

Gross margins of Topline Cement Universe will reach 47% by fiscal year 2020 (which were 34% in fiscal year 2015) while earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins will reach 46% by fiscal year 2020 (34% in fiscal year 2015).

Resultantly, Topline Cement Universe’s profitability is expected to grow at 4-year (fiscal year 2017 to fiscal year 2020) Cumulative Annual Growth Rate (CAGR) of 24%.

Pakistan’s cement industry has entered into a new paradigm. The turnaround in macroeconomic fundamentals, mega projects under the umbrella of China-Pakistan Economic Corridors (CPEC) and booming private sector spending are accelerating local cement demand.



“We believe economic recovery will continue to bolster domestic demand. Based on past trend, we have applied a factor of 2 times to our average real GDP growth forecast of 6% during fiscal year 2017 to fiscal year 2020 in order to arrive at average local cement growth forecast of 12% during the same period,” the report said.

This should take per capita cement consumption of Pakistan from 147kg in fiscal year 2015 to 250kg in fiscal year 2020.

Major capacity additions of 19 million ton (42% of current capacity) worth around Rs192 billion are in pipeline (from fiscal year 2017 to fiscal year 2020) in Pakistan. “Despite these additions, we see no price war risk as additional capacities will easily be absorbed due to buoyant cement demand.”

The government in budget for fiscal year 2016-2017 has changed the federal excise duty (FED) on cement bags from variable 5% of retail price to fixed Rs50 per kg while duty on imported coal is reduced from 6% to 5%. “Thanks to strong pricing power, we believe that, the net impact of Rs33 per bag will be gradually passed on,” the report added.

However some developments can change the present scenario including price competition, imported cement, higher than anticipated rise in gas tariff, delay in construction projects and change in economic policy

Riaz Haq said...

A significant rise in infrastructure projects in the wake of China-Pakistan Economic Corridor (CPEC) is also expected to accelerate demand for iron, steel and cement.
“Imports of both steel scrap and steel products increased by 27.3 per cent and 30.1 per cent, respectively, during July-March FY16,” said the SBP report.
“The imports posted extraordinary growth despite imposition of anti-dumping duties for four months on import of cold-rolled coils and sheets from China and Ukraine,” said the report.

http://www.hellenicshippingnews.com/chinese-imports-capture-steel-market/


The country produces six million metric tons of steel per year, as per a report published by the State Bank of Pakistan (SBP).

This includes raw products, iron ore and scrap flat products, sheets and plates used in the automotive sector, and long products (steel bars, wire rods, rails, and structures used in infrastructure development, and tubes and pipes).

However, per capita steel consumption in Pakistan is very low at 23.5 kilograms against 58.6 kilograms in India, as well as the Asian average of 261.3 kilograms and the global average of 216.9 kilograms, the report added.

https://www.thenews.com.pk/print/112676-Pakistan-produces-6MT-of-steel-annually