Passenger Cars production on the rise in Jul-18

According to research house report, sales of Passenger Cars during Jul-18 in Pakistan are expected to clock in at 20,850units (up 13%MoM/7%YoY) on the back of low base-effect of last month (due to Eid holidays and limited production hours in Ramadan). This will take 7M2018 offtakes to 155k units (up15%YoY).

This should come as a positive surprise for the investors as the market was expecting a slowdown in sales starting Jul-18 due to restriction on sales of cars to Non-Tax Filers.

Experts of Elixir Securities Pakistan – Research stated that amongst the assemblers, Honda Atlas Cars (HCAR) is expected to show the highest growth of 37%MoM/10%YoY as we anticipate the company to have enhanced its capacity. This would take the company’s offtakes for 7M2018 to 31,664 (up 17%YoY).

Pak Suzuki Motors (PSMC) and Indus Motor Company (INDU) are expected to register growths of 2%MoM and 19%MoM mainly due to low base effect of Jun-18. During 7M2018, the companies are projected to clock in YoY growths of 18% and 6%, respectively.

During Jul-18, Tractors’ sales are expected to have stood at 3,800 (+2%MoM, -17%YoY), with sales for Millat Tractors (MTL) and Al-Ghazi Tractors (AGTL) expected to stand at 3,000 and 800 units respectively.

They underweight stance on the sector on the back of ongoing weakness in PKR, expected slowdown in demand, interest rate liftoff, restriction of vehicle purchase by non-filers, and upcoming entry of new players.

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