Rampant floods reduce car sales by 31% in Pakistan

16:36, August 12, 2010      

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Buying of cars by dealers in the month of July 2010 has been dropped by 31 percent in Pakistan due to the rampant floods in the country in which at least 1,294 person died and more than 3.6 million have been affected, industry sources said Thursday.

According to the recent data released by Pakistani Automotive Manufacturers Association (PAMA), the car sales registered a decline of 31 percent month-on-month (MoM) basis, as only 9,796 units were sold as compared to 14,320 units in June this year. Auto sales have also recorded a decline of 34 percent during the said period.

Analyst said that the main reason for the decline in sales is the flood situation in the country which has badly affected the auto sector.

The data also revealed that trucks, buses and LCV, Vans & Jeeps recorded a decline of 15 percent, 18 percent and 19 percent respectively. However, farm tractors and motorcycles & three wheelers recorded positive numbers as were up by 35 percent and 18 percent respectively.

None of the car manufacturers is highly leveraged and currently a very minor portion of sales is derived from consumer financing.

However, industry people said that in the current high inflation scenario, car prices could be reduced if duties were brought at other regional countries level. They said that the duties and levies pushed up the car prices locally.

Industry sources, ignoring the flood effects, pointed out that the impact of economic depression has also marginalized most of the car assemblers. High interest rate, high inflation and substantial decline in the rupee value have taken a toll on the industry.

Car financing, particularly for the smaller cars, has almost dried down, which has impacted production and increased costs for the producers, they said.



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