Import of auto parts plummets in July-September
As a direct outcome of the State Bank of Pakistan restrictions to cool down the demand for automobiles, the import of auto parts plunged by 36.6 per cent to $258 million in the July-September quarter from $407m in the same period last year.
However, the central bank has been releasing foreign exchange between 50-70pc from July onwards to help clear imported consignments of auto parts but imports are yet to pick up the pace.
Owing to supply chain disruption and shortage of inventory levels of parts, Pak Suzuki Motor Company Ltd (PSMCL) kept its production plant closed for 28 days from August to October including a five-day closure on account of period maintenance followed by 29 days plant shutdown by Indus Motor Company (IMC) during August to September and 12-day closure by Honda Atlas Cars Ltd (HACL) during October.
In July-September, auto financing recorded a fall of Rs17 billion to Rs397.4bn.
In a corporate briefing of 1QFY23, the assembler of Toyota vehicles informed the brokerage house analysts that the company is currently running at a production capacity of 40-50pc due to SBP restrictions and the IMC management doesn’t see restriction easing soon.
The management informed the analysts that the automobile sector had been facing unforeseen external challenges due to unprecedented rupee devaluation and import restrictions.
Furthermore, floods wreaking havoc along with higher inflation and low purchasing power of consumers will hurt demand for the entire auto sector in upcoming months.
The auto financing is down from 35pc to just 10pc due to higher interest rates and a reduction in financing tenure, IMC said.
With regards to the recently announced refund policy, the IMC management said that around 400-500 clients cancelled their booking and got their cash back along with interest.
An investment plan of $100 million for local production of HEV vehicles is on track and the company is expected to launch its variant by end of next year in 2023.
Pakistan car sales were down 51pc to 47,178 units in 1QFY23 out of which INDU car sales clocked in at 8,994 units, down 52pc. Used car imports clocked in at 1,039 units in 1QFY23.
Net sales in 1QFY23 fell by 43pc to Rs37bn from Rs66bn in 1QFY22 due to lower production on account of limited imports during the quarter.
Similarly, profit after tax also plunged by 76pc YoY to Rs1.3bn from Rs5.4bn primarily due to gross loss.
According to Sherman Securities, cumulative car sales during 4MFY23 are likely to remain lower by 34pc versus last year.