Tag: Pakistan Automotive Manufacturers Association

  • Pak Suzuki’s fiscal year ends with Rs9.68 billion loss: Operational disruptions and low demand

    Pak Suzuki’s fiscal year ends with Rs9.68 billion loss: Operational disruptions and low demand

    Pak Suzuki Motor Company Limited (PSMCL) has reported a substantial net loss of Rs9.68 billion for the fiscal year that ended on June 30, 2023. The loss was attributed to import restrictions and weakened demand, causing a significant increase compared to last year’s Rs17.238 million loss.

    The drop in sales was due to operational disruptions caused by inventory shortages. The loss per share (LPS) reached Rs117.58 for this year, a stark contrast to the Rs0.21 LPS recorded from January to June 2022. Despite these challenges, the cost of sales remained stable at Rs39.037 billion, compared to Rs108.415 billion the previous year.

    Financial expenses surged to Rs10.141 billion from Rs1.842 billion last year, contributing to the increased losses. However, the company did manage to achieve a Rs3.238 billion profit for the quarter ending on June 30, a significant improvement from the Rs442.989 million recorded during the same quarter the previous year. Earnings per share for this quarter were Rs39.36, compared to Rs5.38 per share in the previous year.

    Experts noted that the second-quarter results exceeded expectations due to increased gross margins from car price hikes. The company also gained from finance income of Rs2.6 billion due to exchange rate gains.

    During this time, the company’s revenue dropped by 67 per cent year-on-year and 2 per cent quarter-on-quarter due to lower sales volume caused by disruptions in raw material supply and reduced demand. Despite challenges, the company achieved a 10 per cent gross profit margin in 2QCY23, a significant increase from 4 per cent the previous year.

    According to The News, the auto sector faces challenges like obtaining Letters of Credit (LCs) for imports and sluggish demand due to high prices and interest rates. Car sales declined 57 per cent year-on-year in the first month of fiscal year 2023–24, as reported by the Pakistan Automotive Manufacturers Association (PAMA). PAMA-registered car manufacturers sold only 5,092 units in July, a 16 per cent decrease from the previous month.

    Despite the challenges faced by Pakistan’s auto industry, including low sales and various disruptions, it’s worth noting that car prices in the country remain at their highest point.

  • Pak Suzuki extends shutdown of motorcycle plant due to lack of raw materials

    The Pak Suzuki Motor Company (PSMC) has confirmed that it will keep its motorcycle plant closed until April 28 due to ongoing import restrictions that have impacted the auto sector, resulting in low inventory levels. A notice to the Pakistan Stock Exchange (PSX) stated that “the management of the company has decided to extend the shutdown period of its motorcycle plant till April 28, 2023.”

    The company had already shut down its motorcycle plant from April 4 to April 15 due to a lack of raw materials, while the automobile plant was shut from April 7 to April 14. PSMC assembles, manufactures, and markets Suzuki cars, pickups, vans, 4x4s, motorcycles and spare parts. The Suzuki brand originates from Japan.

    Pakistan’s auto sector is facing several crises, with other listed companies such as Indus Motor Company Limited and Honda Atlas Cars halting production in recent months due to economic difficulties. Honda Atlas Cars Pakistan extended the shutdown of its plant by another 15 days. Similarly, other automakers, including Indus Motor Company Limited, have announced temporary production shutdowns. According to the Pakistan Automotive Manufacturers Association (PAMA), Pakistan’s auto industry reported a 66 per cent decline in car sales in March 2023 compared to March 2022.

    JS Research analyst Wasil Zaman has predicted a cumulative volume decline of over 50 per cent year-on-year in fiscal year 2023, extending to the first half of fiscal year 2024. Zaman stated that “with foreign exchange reserves at critically low levels leaving little room for improvement on the supply side for auto manufacturers.”

  • Pak Suzuki suffers worst sales decline, sells less than 1,000 cars in February

    Pak Suzuki suffers worst sales decline, sells less than 1,000 cars in February

    Recent reports indicate that Pak Suzuki Motors has experienced a significant decline in sales due to production issues. The company has recorded its worst sales performance in history, mainly because of a shortage of production parts and rising raw material costs.

    Reports reveal that Pak Suzuki sold fewer than 1,000 units in February, marking its worst performance since the country’s COVID-19 lockdowns in April 2020 when production and sales came to a halt. In January, the automaker sold 2,940 vehicles, a significant 74 per cent decrease in monthly sales. This was attributed to the poor sales of the Suzuki Alto, which declined from 6,898 units in December 2022 to 44 units in January 2023.

    The official figures from the Pakistan Automotive Manufacturers Association (PAMA) are yet to arrive, but the total units sold in February are expected to range from the high tens to low hundreds.

    Despite being among the highest-selling automobile brands in the country, Pak Suzuki’s recent sales decline has left it struggling to maintain its position in the fiercely competitive industry. The drop in Suzuki sales is attributed to production part issues, which have caused difficulty in obtaining necessary auto parts due to major supply chain issues caused by the pandemic. As a result, the company has faced a shortage of raw materials and production parts.

    Global inflation has further exacerbated the problem, leading to a rise in the prices of raw materials and an increase in the car prices. This inflation has further contributed to a drop in sales as it has become difficult for the company to access all the required materials.

  • Car sales in Pakistan drop by 65% due to low purchasing power, supply chain disruptions

    Car sales in Pakistan drop by 65% due to low purchasing power, supply chain disruptions

    According to data from the Pakistan Automotive Manufacturers Association (PAMA), passenger car sales in Pakistan experienced a significant decline of 65 per cent in January 2023 compared to the same period the previous year. This was attributed to a shortage of raw materials, low purchasing power, and price surges.

    With the exception of Suzuki’s Swift, sales of all other variants of cars, trucks, buses, tractors, pick-ups, and three-wheelers, as well as two-wheelers, also dropped in January 2023.

    The seven-month sales data for FY23 showed a 43 per cent drop compared to the same period last year, with passenger car sales decreasing by 65 per cent to 6,021 units. In January 2023, engine-wise sales data showed that sales of 1,300cc and above cars were recorded at 4,207 units, down 55.5 per cent compared to the same period last year. Additionally, 1,000cc cars recorded sales of 1,214 units, a decrease of 55.2 per cent from the same period the previous year.

    In January 2023, sales of passenger cars with engines less than 1,000cc plummeted to 600 units, down 88 per cent from 4,820 units sold in the same period last year.

    Sales of Suzuki’s new Alto were particularly hard hit, dropping to 44 units from 3,864 units last year, as the company was unable to produce any due to raw material shortages. Commercial vehicle sales were also impacted, with buses and trucks declining to 470 units from 778 units in January 2022.

    Despite this, the sale of jeeps and pickups increased to 4,846 units from 3,625 units sold last year, largely due to an increase in sales of Honda BR-V and HR-V. Tractor sales, on the other hand, decreased to 3,406 units from 4,966 units in January 2022.

    Meanwhile, sales of rickshaws and motorcycles dropped to 109,558 units from 153,658 units in the same period last year. According to Topline Securities, Pakistan’s overall car sales, including those of non-PAMA members, stood at around 11,500 units, down 37 per cent from the previous month, primarily due to Pak Suzuki’s inability to produce due to the non-availability of CKD parts.

    In January 2023, the automotive industry in Pakistan experienced a 47 per cent year-on-year drop in sales, contributing to a 39 per cent decline in sales for the first seven months of FY23. According to Sunny Kumar, an analyst for Topline Securities, this is due to rising car prices, costly auto financing, and limited consumer purchasing power.

    Pak Suzuki (PSMC) was hit particularly hard, with sales falling to 2,946 units, the lowest level since April 2020, largely due to a credit letters issue. In contrast, Hyundai sales increased 81 per cent month-on-month, with Tuscon sales up 69 per cent and Sonata sales up 241 per cent in January 2023. In the tractor sector, Millat Tractors and Al-Ghazi Tractors recorded increased sales in January 2023 compared to the previous month.

    However, the industry’s overall sales have dropped by 53 per cent YoY to 14,919 units in 7MFY23, affected by floods, plant shutdowns, higher prices, and low consumer purchasing power.