EUR 25.00 For Business Accounts Only

Pakistan Automobiles: Car sales down 75% YoY in May-2020 as COVID-19 continues to hit volumes

• Car sales, as reported by PAMA, have declined by 75% YoY in May-2020 to 4,473 units, while 400-600 units are also expected to have been sold by non-registered car assemblers (e.g. KIA) during the month.
• The decline in sales is mainly due to the closure of business operations of all major car assemblers, which resulted in no invoicing of cars for majority of the month.
• The highest decline was recorded by Honda Car (HCAR) as its units sales were down by 89% YoY in May-2020, followed by Indus Motors (INDU) and Pak Suzuki (PSMC) with declines of 88% YoY and 64% YoY, respectively.
• In 11MFY20 car sales have declined by 54% YoY. HCAR sales are down by 65% YoY, followed by INDU and PSMC with declines of 57% YoY and 49% YoY, respectively.
• Atlas Honda (ATLH) recorded motorbike sales of 12,106 units, down by 88% YoY. In 11MFY20, ATLH sales are down by 24% YoY.
• Tractor sales are down by 49% YoY. Al Ghazi Tractors (AGTL) reported a decline of 89% YoY, while Millat Tractors (MTL) sales have declined by 26% YoY (+70% MoM).
• The official notification pertaining to announced subsidy of Rs2.5bn on GST for tractors remains pending, which has created uncertainty amongst the buyers.
• We expect higher sales for the month of Jun-2020 as restrictions imposed by the government has been eased significantly compared to the outgoing month.

We are currently ‘Under-weight’ on Pak Autos, however we have a ‘Buy’ rating on MTL in Pak tractors space.