During Feb 2024, Auto industry sales totaled 9,709 units, down 8% MoM but up a significant 57% YoY. The notable YoY surge is largely due to a low base effect, as import restrictions heavily dampened sales last year. Sales in 8MFY24 stood at nearly 60,000 units, down 41% YoY. Truck sales continued to show strength, soaring by 65% MoM; truck production number of 327 units exceeded their sales – the highest since Sep 2022 – suggesting sustained strong demand in the coming month due to the implementation of axle load regime.
INDU: Among the three major Japanese OEMs, only INDU saw a decline in sequential sales, dropping by 26% MoM, though it increased by 13% YoY due to the aforementioned base effect. Sales of Fortuner and Revo fell substantially, down 61% YoY and 55% MoM. Sales of Corolla, Yaris, and Cross also decreased by 18% MoM, attributed to the high base due to the launch of Corolla Cross last month.
PSMC: The company continues its momentum with strong sales figures, marking a 7% MoM increase and an impressive 5x YoY growth. The Alto, Swift, and Cultus were the key drivers behind this jump in sales. The strong sales of Swift despite the recent price hikes indicate higher margins in future quarters.
HCAR: Its sales increased by 13% MoM but fell 7% YoY. The sedan portfolio, comprising the Civic and City, showed a 14% MoM and 11% YoY growth, maintaining its position as the company’s top performer, while its SUV products (HR-V and BR-V) continue to lag behind competitors.
Tractor industry: Overall tractor sales were down 12% Month over Month and flat YoY at 3,366 units. This takes 8MFY24 sales to 30,591, up 68% YoY. MTL saw a 10ppt contraction in market share to 64% but continues to remain the market leader. MTL’s sales were down 23% Month over Month and 17% YoY, giving its competitor AGTL the opportunity to increase its market share to 36%, as its sales were up 22% Month over Month and 66% YoY.
The auto industry continues to grapple with challenges stemming from elevated interest rates and inflation. The recent enforcement of SRO 370(I)/2024 has raised the sales tax to 25% on cars priced at PKR4mn or higher, further dampening demand. Previously, the 25% sales tax was only applicable to cars with an engine capacity of 1400CC and above. This change will particularly impact the 1300CC variants of Yaris and City, following inevitable price increases. Our top pick in the sector remains INDU (TP PKR1,640/sh) due to its defensive attributes and the promising performance of the Corolla Cross.
Courtesy – IMS Research