IMS Research has released a report on the automotive sector in Pakistan, updating sales figures for August 2025. According to data from PAMA, auto sales reached 14,050 units in August 2025, reflecting a significant increase of 62% year-over-year (YoY) and 27% month-over-month (MoM). All major original equipment manufacturers (OEMs) saw sales improvements, with the exception of Honda, which continues to face declining volumes. The rebound in auto sales is attributed to improving macroeconomic conditions, lower interest rates, and a recovery in purchasing power.

**Indus Motors (INDU):** Indus Motors sold 3,400 units, an increase of 60% YoY and flat compared to the previous month. The growth was driven by sales of the Corolla, Yaris, and Cross, which rose 63% YoY to 2,553 units, as sedans maintained price competitiveness. Sales of the Hilux and Fortuner rose 50% YoY but fell 8% MoM to 847 units due to rising competition in the pickup segment. Consequently, the company’s market share slipped by 6 percentage points MoM to 24%.

**Honda (HCAR):** Honda sold 1,073 units, representing a decrease of 7% YoY and 28% MoM. The decline was primarily driven by a 35% YoY drop in sedan sales, likely due to deferred purchases in anticipation of the launch of the City Aspire S. In contrast, SUV sales surged nearly fivefold YoY, aided by the introduction of the HR-V HEV. As a result, Honda’s market share fell by 6 percentage points MoM to 8%.

**Sazgar (SAZEW):** Sazgar’s Haval sales rose 10% YoY to 1,045 units, remaining unchanged MoM and sustaining its lead in the SUV segment, despite the Tucson selling 631 units (up 150% YoY). The recent launch of the Haval H6 PHEV is expected to further enhance sales momentum.

**Tractors:** Total tractor sales plummeted to 996 units in August 2025, down 63% YoY, reflecting ongoing weakness in the agricultural sector, exacerbated by flooding. MTL sold 682 units, marking a 44% YoY decline, while AGTL recorded 314 units, representing a 78% YoY decline. The floods continue to pose a significant risk to tractor demand going forward.

**Trucks:** Truck sales saw a remarkable increase of 139% YoY, totaling 596 units. GAL’s volumes rose by 45% YoY to 138 units, while GHNI sold 341 trucks, up 68% YoY, as improving economic activity drives demand for cross-country transportation of goods. GHNI also sold 13 units of the Isuzu D-Max.

Overall, auto sales demonstrated robust YoY growth in August 2025, supported by favorable macroeconomic conditions, which are crucial for further sector recovery. However, the proposed rationalization of auto sector tariffs through 2030 and the extension of the age limit on used car imports to five years introduce uncertainty into the outlook. Sazgar remains our top pick, given its swift adoption of new electric vehicles (NEVs), with the stock currently trading at a price-to-earnings (PE) ratio of 6x, below the industry average.