Pakistan auto industry sales in April were 10,515 units, rising by 12% MoM and 135% YoY.

Auto industry sales in April were 10,515 units, rising by 12% Month over Month and 135% Year over Year. However, on a cumulative basis, in 10MFY24, the industry continued to struggle with total sales of 79,593 units, contracting 31% Year over Year. Unlike sales, car production fell slightly by 2% Month over Month while rising 64% Year over Year. The latter can be attributed to a low-base effect from last year’s import restrictions.

INDU, after two consecutive months of sales declines MoM, experienced a significant improvement in sales, rising by 21% MoM. This positive trend can be attributed to the strong performance of the entire product portfolio, particularly the 2.2x revival in the Fortuner and Revo segment, which was previously underperforming. However, INDU announced a seven-day plant closure in May due to supply chain issues, which could potentially impact production and sales in the coming month.

PSMC: The Company posted a surge in sales of 46% MoM and 307% YoY. The sales growth is impressive, considering PSMC, for the most part, has maintained prices (except for Swift), unlike its competitors, which have reduced their prices to reinvigorate demand, highlighting PSMC’s total dominance in the hatchback segment. Alto continues to dominate the portfolio, accounting for 80% of total sales, as it remains an affordable option during times of high inflation and weak purchasing power

HCAR: Unlike other Japanese OEMs, HCAR saw a 54% MoM fall in sales, primarily driven by sedan sales, which more than halved MoM. BR-V and HR-V also saw a precipitous MoM decline; however, since they make up only a small percentage of overall sales, their impact is less felt than sedan sales.

In the tractor industry, tractor sales were recorded at 3,083, down 33% MoM and 4% YoY. This brings 10MFY24 sales to 38,282 units, up 57% YoY. The strong growth in tractor sales can be attributed to bumper crop yields during the current fiscal year. MTL remains a market leader, with a market share of 66%.

Although improvement in sales remains an encouraging sign, low industry utilization levels have forced Lucky Motor to aggressively cut the price of Kia Stonic by 24%, bringing the price in line with City and Yaris; this may impact INDU and HCAR sales going forward. Another trend we would like to highlight is the 10.1% decline in JPY against the PKR since the start of CY24, which bodes well for Japanese OEMs due to their exposure to yen while prices have remained flat during the same period. Our preferred choice in the sector remains INDU, owing to its robust balance sheet, investment in HEVs and JPY exposure. We maintain a target price of PKR1,910/sh.

Courtesy – Intermarket Securities Limited.


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