Pakistan auto industry sales were down 10% MoM

Industry sales were down 10% MoM, registering total sales of 5,816 units. This takes total industry sales for 6MFY24 to 39,454, down 53% YoY. PSMC managed to outperform its peers this month, however overall industry numbers continue to remain disappointing as demand woes persist.

§  INDU: Sales remained depressed, dropping 28% MoM and 76% YoY. The company sold only 684 vehicles for the month, with both the sedan and luxury portfolio (Fortuner and Hilux) experiencing a double-digit decline in sales. On the production side, there was an improvement as the company manufactured 623 vehicles during the month, marking a 28% MoM increase. This improvement can be attributed to the company being operational for the entire month, unlike November 2023, when the company was shut down for more than two weeks

§  PSMC: Outperforming its Japanese OEM peers, the company witnessed an 7% MoM improvement in sales but were down 67% YoY. Weak sales from Cultus and Ravi were compensated by Wagon R, and Swift while 8% MoM increase in Alto helped the company to post an improvement in sales this month. Improvement of 52% MoM in production figure may bode well for demand in upcoming months

§  HCAR: After a promising November 2023, the company experienced an 11% MoM decline in sales, while sales were down 57% YoY. The primary factor contributing to this decline was weak sales in the sedan portfolio (City and Civic), which constitutes 87% of the company’s total sales. Similar to its peers, HCAR also experienced an uptick in production of 41% MoM; this may signal an improved demand outlook

§  The tractor industry: Sales continued to exhibit weakness in December 2023, experiencing a 26% MoM decline. However, tractor sales for 6MFY24 remained elevated, showing a remarkable 103% YoY increase, indicating a robust recovery in the agriculture sector. MTL and AGTL sales both fell by similar percentages, declining by 25% and 28% MoM, respectively. Nevertheless, MTL maintained a market share lead this month, capturing 81% of the market share.

Auto sales remained disappointing in December, with subdued demand influenced by elevated interest rates and eroded purchasing power. The anticipated monetary easing in FY24 may help improve demand. Our preferred choice in the sector remains INDU. The company recently introduced its Hybrid SUV, the Corolla Cross, at a competitive price. This launch is likely to boost sales numbers in the coming months, as new model introductions often correlate with an uptick in sales. This marks INDU’s simultaneous entry into the hybrid electric vehicle and SUV market segments. We have a Target Price of PKR1,640/sh.

Courtesy-  Intermarket Securities Limited.

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