LAHORE: The country’s local auto sector has witnessed 31 percent growth during fiscal year 2014-15 as compared to only one percent growth in FY2013-14 and 5.3 percent increase in the last 5-year.
According to latest data, local vehicle sales (including LCVs, Vans and Jeeps) increased on the back of new model of Toyota Corolla, Taxi Scheme of Punjab govt, rising consumer sector dynamics and an increase in car financing due to 42-year low interest rates in the country. Local vehicle sales reached at 179,953 units in FY15 versus 136,888 units last year.
It is important to note that imports of used cars are still hovering around 25,000-30,000 per annum. The imports make around 15 percent of car sales market in Pakistan. In FY16, it was estimated local car assembler sales will grow by 13 percent to 203,653 units. Tractor segment also posted a healthy growth of 39 percent YoY during the outgoing FY15 to reach 46,800 units, primarily due to reduction in General Sales Tax (GST) from 16 percent to 10 percent, announced in Federal Budget FY15. This compares favourably with -34 percent growth in FY14 and 5-year (FY11-15) CAGR of -9.3 percent.
Govt’s decision to maintain GST at 10 percent in the current Federal Budget FY16 coupled with announced subsidy schemes of 25,000 tractors by Govt. of Punjab and 29,000 tractors by Govt. of Sindh will further boost growth momentum in tractors volumes, experts believe.
