Pakistan August. The market rolls down after years of record

Pakistan Motorcycles

Pakistani Motorcycles Industry kept in the Q3 the negative 2019 trend and after August sales dropped 8% the year to date figures are down in double-digit.  Honda dominates with share at 60% gaining terrain over local brands. The market stands as the sixth biggest market in the World.

 

Economic Environment

Pakistani economy economy likely stumbled in Q4 of FY 2019, which ended in June. Annual industrial production and merchandise exports declined at an accelerated pace, while agriculture output weakened notably due to adverse weather conditions in Q4. Moreover, the fiscal deficit hit a multi-decade high at the close of FY 2019, largely the result of lower tax revenues, which could strain Pakistan’s ability to meet the IMF’s loan conditions. That said, household consumption was likely supported by a surge in annual remittances and healthy private sector credit growth in Q4.

Economic growth is projected to be lethargic in the fiscal year ending June 2020. A more austere fiscal stance and economic reforms to narrow gaping fiscal and current account deficits will likely hamper short-term growth prospects. Low international reserves, ballooning public debt and tensions with neighboring India present downside risks to the outlook.

 

Market Trend

In a such not positive economic environment and following years of rolling growth, the country’ main industry – the two-wheeler – has declining inexorably.

Indeed, according to data released by the Pakistan Association of Automotive Manufacturers, in the first three months of the 2019 the market has shown discontinuity with the previous trend, breaking the growth after years of records.  Total sales (including both motorcycles/scooters and three-wheeler/rickshaw) have been 425.672, down 12.4% from the correspondent quarter last year, which was the all time record. The already negative trend reported in the first two months, was further deteriorated in March when sales dropped 18.3%.

The trend unchanged in the second quarter, despite the fall moderated, with April sales at 155.215 (-12.3%), May at 154.782 (-8.5%) and June at 142.735 (-9.7%) ending the first half 2019 with 872.000 sales, down 11.9%.

Third quarter looks negative as well after ending July with 114.837 units (-23.8) and August with 129.058 (-8.0%) with year to date figures at 1.11 million (-12.9%).

In recent years, Pakistani motorcycles industry has been among the fastest in the World. Indeed, the milestone of 1 million units has been hit for the first time only in the 2015 and now the market is already running towards the 2 million annual sales. Following the over 1.4 million sales achieved in the 2017, the market further boomed in the 2018, with a record of 1.900.382 sales. up 6.6%, and scoring the new All Time Record.

Thanks to this further outstanding year, Pakistani market gained one place in the Global ranking advancing in sixth place ahead of Thailand.

Pakistan Motorcycles
DYL Junoon

Best selling Brands

As far as regard the competitive landscape, all competitors are producing locally and just a reduced number of manufacturer are fighting in the market, with local brands (DYL, Sohab, United Auto, Sazgar, Road Prince, Hero Motor (a Pakistan company) Ravi) Japanese (Honda, Suzuki and Yamaha) and Chinese (Qingqi).

The most of the demand is concentrated on motorbikes in the 125-150 cc range quite flexible for the local unpaved roads and affordable for people with a still limited purchase power. Premium brands are not yet landed here as the scooter manufacturers, because their segment are negligible. Even Japanese are locally producing low displacement-low cost models and not importing their top class models.

Market leader is Honda with over 60% of market share and 2018 sales at 1.15 million units (+10.8%) with the CB 150F as best model. 

In second place there is the local brand United Auto with 431.517 sales (+16.0%) and in third Road Prince with sales at 207.485 (-11.2%).

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