New Transportation research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 06/25/2013 --Pakistan's new car sales market has continued to contract, in line with BMI's revised view on the country. Cumulative new passenger car sales were down by nearly 30% over the first half of FY13 (ending June), with sales of pick-ups and jeeps down by just over 30%. All told, new four-wheeled vehicle sales (incorporating passenger cars, vans, jeeps, trucks and buses) were down by 29.5% over the first half of FY13, at 58,546 units. This poor performance over the first half of the year is now posing clear downside risks to BMI's current forecast of 150,000 new car sales over FY13. Production of new cars and jeeps has also slumped by a similar amount.

Over the first half of FY13, long-time market leader Pak Suzuki retained its dominance of the shrinking Pakistani new passenger car and pick-up sales market, selling 50,718 units for a market share of 62%. Indus Motor Company (IMC)retained its position as the second most-important player in the local market, with sales of 24,066 CBUs over the six-month period, for a market share of 29.5%, with Honda Atlas recording sales of 6,781 CBUs, for a market share of 8.3%.

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BMI has downgraded its FY13 production forecasts for Pakistan's auto industry, now forecasting a contraction of 2.9% for the sector. This move was triggered by the decision by IMC - which builds Toyota and Daihatsu models - to increase its number of non-production days (NPDs) from seven to 10 during October 2012, as well as the generally unprepossessing backdrop regarding the outlook for domestic sales.

IMC made this decision - which will see its production capacity usage fall to just 50% - in the wake of falling sales for locally made cars, due to the significant competition from the rising number of foreign used cars now being imported into Pakistan. According to an October 2012 report in The News, foreign used cars accounted for 24% of the Pakistani sales market in 2011-12, up from just 4% in 2010-11.

Moving forward, BMI is not optimistic that passenger car production can pick up anytime soon, due to the high price of domestically produced cars, as well as poor consumer sentiment. BMI''s country risk team has forecasted private consumption to grow at just 3.8% across FY2013 (July 2012 to June 2013), down from 11.6% recorded in FY2012. The government's mismanagement of the economy is not helping to boost consumer confidence and anaemic demand for cars is likely to be a continued drag on production going forward. Furthermore, given reports that IMC has more than 3,000 units of unsold inventory, it is unlikely that the company would want to continue to add to its inventory. In such a situation, companies would rather run down stocks than add to inventory stockpiles which have the risk of rapidly losing value. Going forward, the auto component industry might also come under increasing threat, due to a lack of orders.

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