Karachi, July 06, 2021 (PPI-OT): Auto sales of major OEMs expected to decline slightly in June

Auto volumes for Jun-2021 for the Big-3 OEMs are expected to clock-in at 14,439 units, compared to 14,984 units in May-2021, i.e. effectively a slight decline of 4% on MoM basis. For FY21, volumes are expected to clock-in at ~176k units.

The drop in volumes is expected primarily on the back of an anticipated 39% MoM decline in Pak Suzuki Motor Company (PSMC). This is a result of the recent budget announcement, whereby Sales Tax and Federal Excise Duty had been slashed/eliminated, initially for up to 850cc cars (later extended to 1,000cc cars). As a result of the announcement, customers may have delayed purchase of new Suzuki cars, particularly Alto, in anticipation of the price fall. Conversely, PSMC’s production is expected at roughly double the expected sales as the company has geared up production in wake of the budget announcement.

Indus Motor Company (INDU) is expected to register volumetric growth of 29% MoM, with robust growth forecasted for all of its models, particularly the higher priced Fortuner and Hilux. In terms of valuation, we reiterate that INDU remains the most attractive at present as it has managed to retain its market share amid the increased competitive environment.

Honda Atlas Cars (HCAR) is expected to post growth of 65% MoM in June, with 3,305 unit sales expected, i.e. the highest in over 2 years, primarily owing to higher Honda Civic sales. On the other hand, City sales are expected to be lower on MoM basis, as customers are most likely awaiting the new model launch.