EUR 30.00 For Business Accounts Only

Pakistan Automobiles: Lowest annual car sales since FY09; Jun-2020 sales down 52% YoY

• Car sales, as reported by PAMA, have declined by 52% YoY in Jun-2020 to 8,446 units while more than 1,000 units are also expected to have been sold by non-registered car assemblers (e.g. KIA) during the month.
• That said, sales increased by 77% MoM during the month as car dealerships became operational after lifting of COVID-19 related lockdowns/restrictions. Honda Car (HCAR) and Indus Motors (INDU) recorded 514% MoM and 199% MoM growths, respectively.
• Total car sales for FY20 clocked in at 110,583 units, which are the lowest since FY09. The highest contributor to this decline is HCAR (-63% YoY) decline, followed by INDU (-53% YoY) and Pak Suzuki Motor (PSMC, -49% YoY). The year remained turbulent for the car assemblers, as slow economic activity and high interest rates affected demand at the start of the year. In the last quarter, sales were severely affected by COVID-19 outbreak.
• Atlas Honda (ATLH) recorded motorbike sales of 90,039 units in June-2020, up by 5% YoY and 644% MoM. In FY20, ATLH recorded a decline of 22% YoY in its sales (the lowest since FY16).
• Tractor sales in June-2020 are up by 46% YoY and 187% MoM. Al Ghazi Tractors (AGTL) and Millat Tractors (MTL) sales have increased by 121% YoY and 23% YoY respectively. We believe the uncertainty regarding tractor subsidy of Rs2.5bn has ended, when it was not made the part of budget FY21. As a result, farmers which were holding their buying decision to avail subsidy made the purchases in the outgoing month, in our view.
• On an annual basis, tractor sales for FY20 are down by 35% YoY.

We have ‘Buy’ ratings on MTL and INDU.