KARACHI: Expected reduction in interest rates by leasing companies and commercial banks have pumped in much-needed breathing space for the ailing auto sector, experts and analysts of the industry said. "Only in the month of July 2009 the auto sales have risen by 33 percent (year-on-year) to 9,825 units, compared with 7,207 units sold in July 2008," they said.

However, according to the figures released by Pakistan Automotive Manufacturers Association (PAMA), car sales recorded an increase of 51 percent YoY to 8560 units which is the highest since October 2008, as compared with 5,669 units in the same period last year." Except Dewan Farooque Motors (DFML), all the auto assemblers recorded significant increase in volumetric sales, Abdul Azeem, analyst at Invest Capital said. He said that on a model wise basis, INDUS corolla sales increased by 948 percent YoY to 3,124 units from 298 units owing to the limited availability due to launch of new model in August, 2008, while HCAR's Civic and City sales increased by 14 percent (454 units) and 10 percent (686 units), respectively. In lower engine capacity segment, Suzuki Alto and Cultus posted a growth of 48 percent (629 units) and 39 percent (909 units) respectively, he added.

Sales in the LCV & Pickup segment declined by 24 percent YoY to 1,265 units. DFML's Shehzore sales declined by 55 percent to 111 units and Suzuki's Ravi sales dropped by 15 percent to 1,018 units. However, INDU's Hilux recorded the greatest increase in sales of 62 percent YoY to 131 units. The auto sales (month-on-month) witnessed bright picture, as it rose by 9 percent to 9,900 units in July-09. The increase was observed only in the car segment, which witnessed a MoM rise of 13 percent. While LCV & pickup segments sales reduced by 14 percent.

HCAR recorded the greatest increase in MoM sales of 32 percent to 1,100 units with both Civic and City sales rose by 12.4 percent and 49.8 percent. Production of City increased by a notable 45.5 percent MoM to 537 units. Current reduction in Suzuki's Mehran and Bolan sales price boosted the unit sales by 21 percent (1,400 units) and 69.5 percent (946 units) respectively. A 79 percent MoM increase in Hilux (INDU) sales was observed. According to Atif Zafar, an analyst at JS Research the impressive growth in auto sales is misleading as production phase out of Corolla in the corresponding month of last year has deceived growth. Hence, if Corolla is removed from analysis of latest figures, auto sales are actually down 5 percent YoY, he said while talking to Daily Times. Similarly, car sales are up only 1 percent YoY, relative to 60 percent if Corolla sales are included in analysis.

Atif said that on a month on month basis, things continue to improve as both auto and car sales depicted an increase of 9 percent, a fifth consecutive month-on-month increase. The surge in sales is mainly due to removal of 5 percent FED on 850 CC and above segments and reduction in prices by Pak Suzuki on below 850 CC segment, he added. Indus Motor's sales came subdued during the month as sales drop 8 percent MoM amid weak sales of Coure, down 17 percent. The company's flagship product Corolla however, continued to perform well as sales for the product rose by 3 percent MoM. Though car sales are showing a positive momentum, a lot more has to be achieved to turn the tides, an industry official said. "Elimination of FED has been warmly welcomed, monetary easing would be the key to stimulate car sales," he added.