In the coming fiscal year, high car prices are projected to reduce sales volumes

Car sales grew by roughly 50% in the first nine months of fiscal year 2022, but industry analysts predict that volumes would decline in the next fiscal year due to rising car prices and loan rates.

“Auto sales for March 2022 are expected to clock in at 25,800 units which is a growth of 29 percent on both year-on-year and month-on-month basis. Sales during 9MFY22 are set to grow by 50 percent year-on-year to 196,066 units,” said Arif Habib Limited Research Analyst Wasil Zaman.

However, Zaman predicts a decline in auto sales volume for the remainder of the year, owing to the impact of higher taxes and a second round of price hikes in March 2022.

Meanwhile, Muqeet Naeem, a research analyst with Ismail Iqbal Securities, claims that prices have risen by up to 36% since the government lowered taxes and levies last year.

“Looking at the currency devaluation, further price hikes cannot be ruled out. Continuous price hikes coupled with higher interest rates and limitations on auto financing would likely hurt auto demand in the next fiscal year,” he added.

Another price boost by automakers may not be ruled out, according to a Sherman Securities study. “An increase in interest rates may have an impact on car leasing, lowering demand in the future.”

The report did note, though, that the auto industry has shown resiliency in the past and that sales may not fall as fast as the sector’s indications suggest.

Analysts agree that sales would likely remain stable for the rest of the fiscal year because automakers have already placed orders.