· The restrictions on imports have adversely impacted auto assemblers, leading to delays in opening of LCs along with the clearance of CKD kits from ports, due to which auto assemblers are facing frequent plant shutdowns.

· In CY23 auto assemblers have hiked their prices for the 4th time culminating to an increase of more than ~35% on average. Hikes in the policy rate and hefty PkR devaluation have brought consumer affordability into question. We expect for demand to be reduced by more than 50% by the end of FY23.

· Restrictions on LCs have hit automobile assemblers hard. Since SBP’s SRO released in May’22, the situation has continued to deteriorate significantly and is seen from 8MFY23 decline in production of passenger cars down by 43%YoY.

· With a blend of supply and demand shocks, it is quite difficult for OEM’s to perform well going forward. We believe in the absence of any prompt action on the ease of restrictions, the volume can end up decreasing by north of ~50%YoY in FY23.

Courtesy – AKD Research