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Auto Sales to Remain Unaffected by High Petrol Prices

Car bookings and sales in Pakistan remain solid regardless of the all-time high petroleum prices. Motorists are reluctant to shift their means of transportation due to a lack of a proper mass transit system but they may shift to smaller vehicles. This implies that customers’ confidence will remain reasonably stable for now.

A notable repercussion of the surging fuel prices can be observed in the demand for motorcycles, particularly the low-cost, locally-made Chinese brands that are currently the greatest alternative for the low-income strata as opposed to high-quality but costly Japanese motorcycles.

Unaffected Car Sales

Arsalan Hanif, a research analyst at AHL Research, opined, “In [the] absence of reliable public transport, I don’t see car demand would even budge, no matter where the fuel cost goes,” and added that “people would always need to travel for work notwithstanding the price of petrol”.

[An] increase in fuel prices will not directly impact car sales because we do not have alternative options nor do we have a proper public transportation system.

JS Global’s research analyst, Wasil Zaman, does not think that the hiked fuel costs will alter people’s intentions to buy cars. “People may switch to close substitutes or less fuel consuming variants and reduce leisure drives to save on fuel cost,” he said.

Haris Siddique, an analyst at Foundation Securities, feels that the soaring fuel rates will not affect car sales because the current volumetric boom is primarily driven by rural and business clients.

“The consumer base perceives high fuel cost as a temporary phenomenon, whereas automobiles are considered to be a moving asset,” he said and added that “a shift within segments as consumers may move down from higher to lower ones, but overall demand is highly likely to remain intact”.

Own Culture

The Chairman of the All Pakistan Motor Dealers Association (APMDA), H. M. Shahzad, believes that the fuel price hike will not have a short-term impact on the sector because car manufacturers have oversold vehicles to be supplied within a period of nine months.

“I don’t expect car sales to come down anytime soon. Given hefty ‘own-money’ being charged by the car sellers on early delivery, we can easily say the demand is not going anywhere,” he said.

Own money is an illicit premium that dealers charge purchasers in exchange for speedy vehicle delivery. Automakers dismiss claims of their involvement in it but the reports state otherwise.

Car Owners Buying Motorcycles

Sabir Sheikh, the Chairman of the Association of Pakistan Motorcycle Assemblers (APMA), claimed that the rise in fuel prices has prompted a number of car owners to become motorcyclists.

“Car owners are buying motorcycles to cushion the fuel price shock,” he continued and attributed the spiked sales of Japanese motorcycles to this phenomenon.

However, Sheikh reasoned that the escalating prices of petrol and food, and inflation overall have impacted the market for low-cost Chinese motorcycles. “We are seeing sales of Chinese motorcycles dropping and many bike makers were on the verge of shutting down their operations,” he said.

Courtesy: Propakistani

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