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Pakistan Automobiles: 1QFY19 Auto Sales fall 4% YoY

• Pakistan Auto sales grew by 3% YoY in Sep 2018, breaking the trend of falling volumes in past couple of months. Sales were also up by 10% MoM due to higher number of working days in the month of Sep 2018 compared to Aug 2018. However, sales are down 4% YoY for 1QFY19. The decline in industry sales was muted (due to low base effect of HCAR sales in Sep 2017) but was still the steepest 1Q fall since FY13. We continue to expect significant demand contraction in auto sector due to 1) deteriorating macroeconomic environment, 2) multiple prices hikes since Dec 2017 and 3) impact of law requiring car purchasers to be tax filers, in our view.
• Automobile prices are expected to rise further due to sharp PKR depreciation (8%) witnessed yesterday. This further solidifies our stance on volumetric decline within auto sector as consumers’ affordability comes into question.
• Honda (HCAR) witnessed significant increase in volumes as unit sales rose by 32% YoY due to low base effect from Sep 2017. Similarly, on a sequential basis, unit sales increased by 14% MoM while 1QFY19 sales are up by 7% YoY. Variant wise, Civic and City rose by 47% YoY while BR-V sales continued to disappoint falling by 35% YoY.
• Indus Motors (INDU) sales remained flattish YoY, with the company recording 2% MoM decrease in units sold. Moreover, in 1QFY19, the company has sold 15,419 units, up by 2% YoY. During Sep 2018, sales were led by Corolla, up by 8% YoY. On the other hand, Hilux sales saw a rapid decline, down by 42% YoY, reversing the trend of high growth witnessed in first two months of FY19. Simultaneously, Fortuner sales continued to fall, -29% YoY.
• Pak Suzuki Motor Company (PSMC) continues to report the worst decline in volumes, with Sep 2018 sales down by 5% YoY. However, sales were up by 14% MoM. For the 1QFY19, unit sales are down 10% YoY to 29,478 units. During Sep 2018 Wagon-R and Swift led the growth chart, up by 61% YoY and 41% YoY, respectively. However, unit sales were dragged down by 37% YoY and 23% YoY decline in Mehran and Bolan, respectively.