Pakistan’s Auto industry sold 12,593 units in Jul’19, down 41%yoy/28%mom as Jul’19 started with sharp 15-20% price increases (inclusive of the revised FED). We already suspected pre-emptive buying in Jun’19 (when volumes declined by a moderate 5%yoy) which may have contributed to Jul’19 decline. On sequential basis, only Alto has higher unit sales in Jul’19, as it is a newly introduced model.

Volumes of Honda Atlas Cars (HCAR) declined the most in Jul’19 (down 66%yoy) as higher interest rates impacts its customers more. Pak Suzuki (PSMC)’s unit sales declined by a less severe 23%yoy in Jul’19 due to Alto launch. But a 70%yoy drop in Wagon-R volumes suggests cannibalization by Alto in the entry level cars. Indus Motors (INDU), which has been delivering growth until recently, also saw a decline of 56%yoy in Jul’19. In case of INDU, the monthly decline of 55% is also the highest among peers, suggesting that plant maintenance during the month may also have contributed to this decline.

Tractor volumes declined by 20%yoy to 3,089 units in Jul’19 due to poor farmer economics and absence of subsidy schemes. PAMA reported 2/3 wheeler sales dropped by 27%yoy as increase in petrol prices affect this segment severely in addition to higher bike prices.

This is the first month of such a sharp decline in auto sales – the extent of the decline exceeded expert expectations.