FLASHNEWS:

AKD Securities Limited – AKD Daily (15-08-2022)

Karachi, August 15, 2022 (PPI-OT): Pakistan Autos: The thunderstorms arrive!

The total industry sales in Jul’22 clocked in at 14,375 vehicles (-51%YoY/-61%MoM), consisting of 10,377 passenger cars (-50%YoY/-56%MoM), 1,470 LCVs (-65%YoY/-70%MoM), and 234 trucks (-27%YoY/-50%MoM). The massive decline in sales is owing to a supply-side shock hitting the industry regarding the inability to import of CKD kits.

Segment-wise, the 1000cc segment emerged as the least favourite category, posting a drop of 85%YoY followed by 1300cc+ segment, declining 39%YoY and 800cc and below segment witnessing decline of 30%YoY. On top of it, volumes witnessed similar declines on a MoM basis with the 1,000cc segment declining by 80%MoM, while the 1,300cc+/800cc segments posted declines of 56%/43% MoM.

Amongst major OEMs, HCAR posted sales of 2,537 units, gaining 10%YoY. Furthermore, INDU/PSMC posted sales of 2,375/6,679 units, down 65/56%YoY. On MoM basis, INDU/PSMC/HCAR have posted declines of 62/58/35%MoM for Jul’22.

On the macro perspective, we believe that the steep decline in volumes depicted in July indicate that supply issues have greatly impacted the OEMs, with OEMS experiencing Non-Productive days in the month. Going forward, SBP has set a quota system for the opening of LCs for OEMs, which will impact the sales till at least October. Furthermore, demand will remain impacted with ~20% price hikes across the board in recent weeks.