High car prices: Likely to reduce sales volume next year

KARACHI: The car sales volume increased by around 50 percent in the first nine months of the financial year 2022. But industry experts see auto volumes coming down in the next fiscal amid increasing car prices and hike in interest rates.

“Auto sales for March 2022 are expected to clock in at 25,800 units. Which is a growth of 29 percent on both year-on-year and month-on-month basis. Sales during 9MFY22 are set to grow by 50 percent year-on-year to 196,066 units. Said Arif Habib Limited Research Analyst Wasil Zaman.

However, Zaman added that he sees a declining trend in auto sales volume for the remaining part of the year. As the impact of increase in taxes and the additional round of price hikes in March 2022 would weigh in.

Meanwhile, Muqeet Naeem, research analyst at Ismail Iqbal Securities said that prices have gone up by up to 36 percent. Since the price came down last year after the government reduced taxes and duties.

“Looking at the currency devaluation, further price hikes cannot ruled out. Continuous price hikes coupled with higher interest rates and limitations on auto financing would likely hurt auto demand in the next fiscal year,” he added.

Also Read: Toyota IMC Sets Record for Highest Sales in a Month

According to a Sherman Securities report, another price hike by the car assemblers could not ruled out. “A hike in interest rate may affect car leasing eventually reducing demand going forward.”

However, the report added the auto sector has shown resilience in the past and sales may not go down as indicators attached to the sector suggest.

Analysts concur that sales might remain intact during the remaining part of the ongoing fiscal year as car companies have already booked orders.