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Pakistan Automobiles: Oct 2018 Auto Sales up 6% YoY

• Pakistan Auto sales grew by 6% YoY in Oct 2018, continuing the growth trend from last month. To note, volumes had fallen in July and August 2018 but were up by 3% YoY in Sep 2018. Sales were also up 28% MoM due to higher number of working days in the month of Oct 2018 compared to Sep 2018. Moreover, price hike anticipation owing to currency devaluation and higher input costs may have also encouraged customers to get into early purchase, we believe.
• Although 4MFY19 figure shows flattish growth, we maintain our sluggish auto demand outlook 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. The slow down in demand would be more apparent post Dec 2018, in our view.
• The increase in Automobile prices due to latest round of PKR depreciation (8%) also gives credence to our forecasts of volumetric decline in coming months as cars become more expensive.
• Indus Motors (INDU) led the growth chart with sales volume up by 25% YoY. Similarly, on a sequential basis, volumes increased by 30% MoM while for 4MFY19, sales are up 8% YoY. Notably, INDU recorded second highest monthly sales number in its operational history, where the company had recorded its highest ever monthly sales in Jan 2015 with 6,415 units vs. 6,409 units in Oct 2018. Within the variants, Corolla sales were up 33% YoY. On the other hand, Hilux and Fortuner sales declined by 6% YoY and 23% YoY respectively.
• Honda (HCAR) depicted YoY growth of 11% while the company exhibited volumetric growth of 11% MoM and 8% YoY for 4MFY19. The growth was generated from sales of City and Civic variants, up by 31% YoY while BR-V sales growth continued to disappoint, contracting by 52% YoY. We believe the slow down in BR-V sales is due to the variant reaching a stabilization stage after a initial high growth period attributable to its launch in Pakistan.
• Pak Suzuki Motor Company (PSMC) persisted with its declining trend on a yearly basis where sales volume declined by2% YoY. Sales are up 36% MoM and down 8% for 4MFY19. Sales growth was led by cultus, Swift, and Ravi variants, up by 65%, 45% and 13% YoY, respectively. On the other hand, Mehran, Bolan and Wagon-R depicted sales contraction of 24%, 22% and 4% YoY, restively. To note, this is the first time since the launch of Wagon-R that the car has shown YoY decline in units sold.