Pakistan car sales jump as consumer confidence picks up
15/01/2016 10:37
By Tommy Wilkes and Syed Raza Hassan
ISLAMABAD/KARACHI, Jan 15 (Reuters) - Sales of new cars in
Pakistan hit their highest level since at least 2007 in the
second half of last year as consumer confidence rebounded,
thanks to a drop in militant violence and lower inflation.
Pakistan's economy, the world's 44th largest, has suffered
under years of violence waged by various militant groups, large
budget deficits and a chronic shortage of energy to fuel
industry.
Last fiscal year the economy grew 4.2 percent, slightly
better than in 2014, but falling inflation and a drop in
interest rates has put more money into consumers' pockets.
Militant attacks also fell sharply last year, encouraging
wealthier urban Pakistanis to spend more.
Total cars sold in Pakistan, where levels of car ownership
remain low, in the six months to Dec. 31 jumped 53 percent from
a year earlier, data released this week by the Pakistan
Automotive Manufacturers Association showed.
Japananese manufacturers Toyota Motor Corp 7203.T , Honda
Motor Co Ltd 7267.T and Suzuki Co Ltd 6785.T , which dominate
the Pakistani car market, sold a combined 89,824 passenger cars
versus 58,727 in the second half of 2014, said PAMA, which
calculates car sales for six-month periods ending in June and
Dec.
That level of sales is the highest for a July-Dec. period
since at least 2007, according to the data.
"The purchasing power of the middle (class) has increased as
oil prices have plunged and interest rates have gone down and
overall inflation is very much under control," said Fawad Khan,
head of research at KASB Securities Pvt. Ltd.
Mumshad Ali, an automotive industry expert, said lower car
financing costs and reduced crime in the violent metropolis of
Karachi, Pakistan's largest and wealthiest city, had also
helped.
"The economy is doing better and people are buying cars.
People in Karachi didn't change their cars very often. That has
changed," he said.
Sales of trucks also rose last year after the government
launched an incentive scheme to boost demand, but tractor sales
fell 40 percent as lower commodity prices squeezed incomes in
rural areas, where most Pakistanis live.
Ali said that while passenger vehicle sales were rising,
tractor and motorcycle purchases in rural areas could fall
further and offset rising demand for cars in cities.
Pakistan's central bank said last month that the economy
remains structurally weak. Sluggish private investment, low
levels of tax collection and a struggling export sector have
kept growth below the 6 percent-plus needed to absorb new
entrants into the work force from an expanding population of 190
million. urn:newsml:reuters.com:*:nL3N1403MC
(Writing by Tommy Wilkes; Editing by Sunil Nair)
((thomas.wilkes@thomsonreuters.com; +91 114 178 1030; Reuters
Messaging: thomas.wilkes.thomsonreuters.com@reuters.net))
Keywords: PAKISTAN AUTOS/