people are paying a little more for SUVs
Pakistan’s car industry has seen more preference towards sport utility vehicles (SUVs) rather than low-end cars, which were expected to be rolled out when the new auto policy was unveiled.
SUVs are becoming more common among both manufacturers and customers.
Investment analyst Arsalan Hanif said:
“Pakistan’s auto market is growing and a switch from sedan to SUVs or crossover is taking place.
“With advanced technology and better safety features in the SUV segment, its acceptability ratio has increased.”
Companies have pinned high hopes on this type of vehicle.
This is shown in the testing of the Changan UNI-T, which is loaded with technology but is considerably cheaper than its competitors.
Mr Hanif said that there is a 10-20% price difference between sedans and SUVs in Pakistan.
As a result, people are paying a little more for SUVs due to the better features and luxurious feel.
SUV manufacturers are also growing in popularity because of the decline in luxury car imports.
Globally, SUVs are attracting more attention as their market share is increasing.
In India, the SUV market share has risen from 10% to 36% since 2012.
However, Regal Automobiles managing director Muhammad Adeel Usman argues that most of the newly-introduced cars were crossover utility vehicles (CUVs), not SUVs.
He said that estimated CUV sales were 5,000 units per month for all companies.
Mr Hanif said: “As far as sales performance of SUVs is concerned, KIA has managed to sell around 25,000 Sportage since its operations commenced.”
Pakistan’s Hyundai Nishat sold 2,759 units of the Tucson in the first nine months of the current fiscal year 2020-21.
MG also sold more than 2,000 units.
But a lot of new players like Peugeot and Changan are planning to launch SUVs in Pakistan because low-end cars face more price competition and have low margins.
According to Mr Usman, the new entrants are introducing CUVs after seeing the trend in the international market where sales of CUVs have increased rapidly.
Due to a healthy economy, Pakistan’s car manufacturers are enjoying success.
Banks have also provided a boost to demand, by providing the highest number of car loans in 2021.
Although the new entrants have started launching budget sedans, CUVs are an easier market to look into.
Mr Hanif said that the buying power of consumers also provides a level playing field as lower interest rate, improvement in macros, higher foreign remittances and revival of economic activity have improved the purchasing power of consumers.