Automakers fear major dent in rural sales ‘due to floods’

KARACHI: After depressed sales in July, auto assemblers paint a gloomy demand scenario in the coming months due to flash floods in various rural parts of the country that have destroyed standing crops and homes of growers.

A sizable volume of motorbikes and four-wheelers are sold in rural areas where small to large growers earn their livelihood through various crops.

Road Prince Motorcycle CEO Sohail Usman said that bike sales of Chinese assemblers have been depressed for the past few months due to high prices and may fall at least 50 per cent of the sale during the same period last year.

He said a large number of buyers in the rural areas would not lift new bikes due to the already rising cost of living, adding that the real impact would be more visible in the next two to three months.

Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Sheikh said around 50pc two-wheelers were sold in rural areas. Floods have reportedly destroyed standing crops of vegetables, cotton, bananas etc.

Moreover, growers also store wheat for their future consumption and floods have washed away their main staple food.

As soon as the situation improves, the flood-affected people would first procure food items and resume construction of their houses depending on the government’s aid instead of focusing on purchasing automobiles, which would slow down the overall auto sales in the next two months.

Mr Sheikh said rural buyers would be reluctant in buying a new bike given the devastation of the road network, which may take months to repair.

According to an analyst briefing held in the last week of May, the share of rural buying in total sales of Pak Suzuki Motor Company Ltd (PSMCL) is 40pc.

PSMCL Head of Public Relations Shafiq Ahmed Shaikh told Dawn that a major portion of sales will be affected due to recent floods. “We are expecting that the government will also consider some relief for the auto sector.”

A Korean car assembler said a disastrous situation has emerged after the floods and there would be a significant impact on sales. He said sowing of all kharif crops would be delayed besides impacting the incomes of growers.

An official in Honda Atlas Cars Ltd said their majority sales are in urban areas.

According to Topline Securities, total car sales including non-members of the Pakistan Automotive Manufacturers Association (PAMA) clocked in at 14,000 units in July, down by 59pc month-on-month and 52pc year-on-year due to production issues, higher prices, the low purchasing power of people and fewer working days due to Eidul Azha holidays.

Overall two- and three-wheeler sales plunged to 96,162 units in July versus 145,197 in the same month in 2021. Honda, Suzuki, and Yamaha sold 80,067, 3,512, and 1,261 units respectively in 1MFY23 compared to 100,002, 2,715, and 1,607 units a year ago.