Paradigm shift in the Pakistani automotive industry
Consumers must have wondered why new entrants to Pakistan’s auto sector are introducing more sport utility vehicles (SUVs) instead of low-end cars, which were due to be rolled out when the new auto policy was unveiled.
“The Pakistani auto market is growing and a shift from sedans to SUVs or crossovers is underway,” said Arsalan Hanif, automotive analyst at AHL Research. “With advanced technology and better safety features in the SUV segment, its acceptability rate has increased,” he added.
Companies have placed high hopes on this category, which is reflected in recent tests of an autonomous SUV, UNI-T, by the joint venture of Master Motors and Changan.
With a 10-20% price difference between the sedan and SUVs, consumers had started to favor SUVs because of better features and a more luxurious feel, Hanif said.
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On the other hand, a drop in imports of luxury or high-end cars also offers a level playing field for SUV manufacturers.
Likewise, on the global front, SUVs are gaining more and more attention as their market share grows. For example, in India, the SUV market share has increased from 10% to 36% over the past eight years.
However, contrary to Hanif’s opinion, Regal Automobile Pakistan Managing Director Muhammad Adeel Usman said that most of the recently introduced cars were not SUVs, they were called Crossover Utility Vehicles (CUVs) and their sales estimated at 5,000 units per month for all companies.
“When it comes to SUV sales performance, KIA has managed to sell around 25,000 Sportages since the start of operations,” Hanif said.
Hyundai Nishat sold 2,759 units of Tucson in the first nine months of the current fiscal year 2020-2021. According to the vine market, MG, an unlisted player, has also sold over 2,000 units.
A majority of new players (BAIC, Hawal, Peugeot, Changan and Cherry) are also planning to launch SUVs in Pakistan as low-end cars face increased price competition and have low margins.
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The new entrants are introducing CUVs following the trend of the international market where CUV sales have grown rapidly, according to Usman.
Pakistanis have been deprived of sustainable and affordable vehicles for a long time, but with the added benefit of a healthy economy, auto players are now having an amazing year.
Banks have given demand a new boost, offering the highest number of auto loans this year, he added.
Although new entrants have started to launch “economy sedans,” CUVs are an easier market to tap at the moment.
Consumers’ purchasing power also provides a level playing field, as lower interest rates, improved macros, increased overseas remittances, and economic recovery have helped. improved the purchasing power of consumers, Hanif said.
Posted in The Express Tribune, May 16e, 2021.
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