Pakistan Autos sales during October 2020, inch higher led by INDU

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In October 2020, the Auto industry sales witnessed 29% yoy growth (flat mom) to 14,082 unit, largely attributed to INDU, which witnessed a 120% yoy (26% mom) rise in sales. Both HCAR and PSMC dragged headline industry growth as sales for both declined by 18% and 7% mom, respectively. This takes 4MFY21 industry sales to 51,465 units, up 13% yoy. The uptick in demand yoy may have been propelled by the sharp monetary easing since mid-March and good agricultural produce (rural areas is a key market for INDU).

INDU sold 1,314 units / 3,058 units of Corolla / Yaris, up a combined 20% mom. We believe Yaris sales will continue its upward trend due to a healthy backlog of orders, as per channel checks. This is corroborated by INDU recently reverting to double shift production, and planning to introduce an overtime shift from January 2021, in order to decrease production lead times. Strong demand for luxury vehicles (Hilux and Fortuner) led to an average 28% mom increase in sales.

HCAR sold 2,230 units in October, with Civic and City sales of 1,858 units, up a staggering 80% yoy, while down 19% mom. BR-V sales increased by 7% yoy to 372 units. We think the mom decline could be attributed to the sharp rise in Yaris sales, overshadowing City.

PSMC’s Wagon R sales rose a sharp 126% yoy to 1,198 units, while sales of the Alto declined by 7% mom to 2,893 units (albeit down 29% yoy). The yoy decline in sales for the Alto (and PSMC overall) may be attributed to a high base against the new Alto launch in June 2019, which was well received. 

Tractor industry recorded sales of 4,482 units, up a sharp 57% yoy. AGTL sales rose by a massive 73% yoy to 1,475 units (vs. 853 units SPLY). Sales for MTL were up a sharp 51% yoy to 3,007 units. This is likely attributed to an increase in farmer income following a strong performance in major crops (excluding cotton).

Sales for Hyundai clocked in at 289 units in September, compared to 316 units in August, potentially due to supply chain issues and slower production lead times because of an unprecedented surge in demand for the Tucson, according to channel checks. With Kia capturing 10% of the market during 1QFY21, we believe the Sportage may be eating away at Civic sales.

Total industry sales in October clocked in at a 16mth record high of 14,082 units. However, we expect sales to decline from November and December due to the year-end phenomena. We expect a noticeable recovery in sales thereafter particularly as auto-financing picks up next year, in our view. In this backdrop, newer models such as a Honda City and rumored Kia Cerato and Hyundai Elantra (among other entrants) could serve to attract consumer interest.

We are currently Underweight on the Auto OEMs, but are in the process of revising our stance. We are currently Neutral on both INDU with a TP of PKR1,273/sh and MTL (TP of PKR902/sh) in the tractors space.

 Autos – Sales volume (‘000)

          

Units

Oct’20

yoy

mom

4MFY21

yoy

 

Units

Oct’20

yoy

mom

4MFY21

yoy

Industry Performance

     

INDU

5.48

120%

26%

17.20

87%

Industry Sales

14.08

29%

1%

51.47

13%

 

Corolla / Yaris

4.37

121%

20%

14.00

87%

Cars

12.00

25%

1%

43.87

8%

 

Hilux

0.87

111%

45%

2.57

90%

LCVs & Pickups

2.09

53%

-2%

7.60

53%

 

Fortuner

0.24

137%

94%

0.63

75%

Tractors

4.48

57%

5%

15.21

24%

       

Trucks

0.32

34%

-6%

1.10

-1%

 

PSMC

6.05

-13%

-7%

23.54

-22%

2/3 wheelers

175.29

12%

11%

621.93

19%

 

Bolan

0.68

70%

9%

2.44

62%

       

Ravi

0.29

-32%

-49%

2.01

2%

Company wise

     

Cultus

0.82

-31%

4%

4.08

-15%

PSMC

6.05

-13%

-7%

23.54

-22%

 

Wagon R

1.20

126%

3%

3.66

36%

INDU

5.48

120%

26%

17.20

87%

 

Swift

0.18

19%

-29%

0.81

20%

HCAR

2.23

61%

-18%

9.67

66%

 

Alto

2.89

-29%

-7%

10.54

n.m.

MTL

3.01

51%

7%

10.23

50%

       

AGTL

1.48

73%

2%

4.95

-7%

 

HCAR

2.23

61%

-18%

9.67

66%

HINO

0.08

-49%

18%

0.25

-59%

 

Civic & City

1.86

80%

-19%

8.34

68%

GHNI

0.21

62%

4%

     0.71

-8%

 

BR-V

   0.37

7%

-11%

     1.32

51%

Source: PAMA

     

 

     
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