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Pakistan Automobiles - Mar 2019 Auto Sales up 2% YoY

 

• Pakistan Auto sales are up by 2% YoY in Mar 2019 (+16% MoM) led by higher sales from PSMC. In 9MFY19, auto sales clocked in at 185K units, down by 4% YoY. This decline can be attributed to slowdown in economy & rise in recent car prices.
• Indus Motors (INDU) reported 11% YoY decline during Mar 2019 mainly on account of lower sales of Fortuner & Hilux, which were down 63% and 65%, respectively, YoY. This was due to 10% Federal Excise Duty (FED) imposed on above 1700 CC engine cars. Corolla sales posted growth of 2% YoY.
• Pak Suzuki (PSMC) reported 23% YoY growth in sales led by growth in Wagon R with growth of 63% YoY. Other major contributors in overall growth were Cultus, Bolan and Ravi, up by 17%, 38% and 36% YoY, respectively. Swift was the only PSMC variant to record decline, down 16% YoY.
• Honda cars (HCAR) sales fell 29% YoY in Mar 2019, steepest YoY decline during a month since May 2012. In addition to economic factors, decline in City and Civic variants is attributed to anticipation of a launch of new variant (Civic 1.5 Turbo new variant launched in April-19).
• Going forward, overall demand of automobiles is expected to remain subdued due to recent hike in policy rate (+475bps since Jan 2018 to 10.75%), resulting in higher borrowing cost for auto financing. Furthermore, incremental cost as a result of rupee devaluation & increasing inflation has led to higher car prices, impacting purchasing power of car buyers. To note, the Govt. is mulling over removal of 10% FED on engines with 1700CC above, as per news reports. However no official announcement has yet been made, adding to the uncertainty to the car sales with engine size of over 1700CC.